Perhaps owning an investment property is your dream. If so, why not go big and invest in a few rather than just one? The idea of having a steady income every month sounds like music to the years, and the low-interest rates of certain markets make the idea seem even more lucrative. You must know that while investing in a rental property is an appealing idea, it isn’t without certain risks. 

Take Canada’s overall vacancy rate, for example. While it used to be 2.0% in 2019, it rose to 3.2% in 2020 for all bedroom types, as a direct result of the COVID-19 pandemic. 

Irrespective of whether properties are occupied, owners are still supposed to gather up the amount for their mortgage, property taxes, and other such home-owning expenses. 

Advantages

Let’s take a look at some of the advantages of owning a rental property in Canada. 

• Steady monthly income even after the expenses are deducted.
• The property value continues to appreciate.
• Taxes can easily be deducted from your gross rental income. These include; mortgage interest, insurance, property taxes, maintenance costs, utility bills, and property management fees. 

Disadvantages

Now, let’s take a dive into the disadvantages of owning a rental property in Canada. 

• The added responsibilities of being a landlord can be tough sometimes. It will be your responsibility to deal with any repairs, which sometimes happen on an emergency basis. You will have to deal with difficult tenants at times and have to be vigilant in collecting rent. Handling a lot of these responsibilities on a daily basis will cut into your monthly income. 
• It isn’t always easy to sell. It is entirely dependent on the market conditions. Selling a property is hard enough on its own, and selling a rental property is even harder when you begin to factor in all the costs of a real estate agent and legal fees. 
• Unexpected and routine expenses can pile up. Owning a property is no easy feat; it can end up being rather expensive. You have to handle your mortgage down payment, utilities, repairs, maintenance, and upgrades. It can be as high as 2% of your property’s entire value. You will also need to have a rainy day fund to pay all these bills if you cannot find a new tenant after an old one leaves. 
• Rental income is indeed taxable! The income you obtain from renting your property is taxable income. Because of this taxable income, you may also be subjected to a much higher marginal tax rate. This could lead you to pay more tax on every dollar you earn. 

Renting a property can indeed be very profitable, and all of these disadvantages listed above can easily be avoided with the help of a reliable real estate agent such as the ones you will find at Homes at Blue Mountain, to help you invest your money properly. When you select a property to rent out based on our real estate brokers’ valuable insight and experience, you can be sure to turn a profit in no time!

Reach out to us at Homes at Blue Mountain now for more information.