Becoming a homeowner with an income property - something to think about!
Before buying a house with rent income, you must consider several key points. The Mortgage Planners team invites you to consider both sides of the coin.
Advantages
- An extra, steady income
The monthly rent will help you pay off your mortgage more quickly. Once your mortgage is payed off, your home will continue to generate income, which is a big plus for your financial portfolio.
- Pay less income taxes
You can deduct certain expenses from your income. Ultimately, you will pay less taxes. These are set out below:
- Interests of your mortgage loan;
- Municipal and school taxes;
- Home insurance;
- Home maintenance and renovations;
- Expenses related to the services included in the rent (electricity, for example).
Disadvantages
- Additional responsibilities.
Ensuring that the rental unit meets building code, finding the right tenant and maintaining the premises. That’s right! You may need to cancel a weekend at the cottage to perform emergency renovations in the bathroom, because the washer decided to kick the bucket. Emergencies never take a break; they can occur at any time.
- A disturbing tenant.
During the selection interview, they assured you they were very quiet. However, it seems your new tenant likes to play guitar every night before going to bed... very late. Choosing a tenant often relies on their good faith. Will they care of the premises just as you would? Will they pay you on time every month or will you have to run after your rent?
- A more challenging sale.
A property with rent income won’t appeal to everyone. You may have to lower your price to sell your home or reconvert it to a single-family home.
- Less privacy.
Depending on the conditions stated in the lease, sharing your backyard, especially if your tenant has guests, might annoy you in the long run.
Still think the advantages outweigh the disadvantages? In that case, start your adventure by surrounding yourself with real estate experts. Are you having second thoughts? It may be a sign to think about it some more or downright give up on the project.
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