Advantages of Being a Landlord

The decision to become a landlord is not one you should make lightly. If you are looking to invest in real estate, there are quite a few things to consider. It is true that becoming a landlord can be a lot of responsibility, but there are also tons of advantages which may not be known to new investors.

Wealth building: If you hold on to property long enough, it will almost always go up in value. This is termed “appreciation” and is a good way to increase your net worth.

Cash flow: If managed properly, a rental property can bring in a steady stream of income from AAA tenants.

Investment diversification: A diversified investment portfolio is one of the most important rules of investing. Owning a property, which tends to be lower-risk, is a good way to diversify your investments.

Leverage: In real estate, a little cash will go a long way – unlike other types of investments.

Being your own boss: There can be a lot of personal satisfaction that comes with being your own boss, especially for those who love independence in their work lives.

There are also tax benefits to owning a property. Here are some of the things you may be able to write off as a landlord:

  • Interest: Mortgage interest payments on loans and interest on credit cards related to rental activity can all be deducted.
  • Repairs: The cost of repairs to your rental property is fully deductible.
  • Travel: Landlords can deduct travel expenses related to the rental activity.
  • Depreciation deductions: landlords can also deduct the depreciation value of their house over 27.5 years, even while they are increasing in value. This will help save some of the positive cash flow without having to owe income taxes.
  • Property taxes: You can deduct property taxes that relate to the rental property for the period that it is being leased.

As mentioned, this is not a decision that should be made quickly. Potential landlords have to ask themselves if they really feel suited for the job. Additionally, certain factors need to be looked into. For one, it is important to calculate the expected cash flow that will be generated from the property (taking into account vacancy time and other expenses).

As always, it would be best to speak to an expert real estate agent about questions or concerns. So, if you have questions about becoming a landlord, we’d love to help! We offer a full range of services for our landlord clients and can make the transition as easy as possible for you. Call us at (416) 929-1660 or email us at resupport@axoncapitalrealty.com to begin discussing your options.

Sources:

http://www.thestar.com/business/2013/05/09/money_monitor_is_being_a_landlord_right_for_you_.html

http://www.marketwatch.com/story/the-tax-advantages-of-being-a-landlord-2013-04-23

http://www.nolo.com/legal-encyclopedia/landlord-benefits-renting-property-29596.html

http://www.nolo.com/legal-encyclopedia/landlord-pros-cons-29494.html

Toronto Condo Rentals Q1 2013

According to Urbanation this month, there has been enormous increase of rental transactions in the first quarter of 2013, over 31% from a year ago. This reflects the ongoing demand for downtown condominium living and the slight hesitation of potential buyers from making the commitment to purchase given all the unbalanced negative media sentiment on the condo market.

While some of these buyers are sitting on the sidelines with a “look and see” attitude, they nevertheless require housing, and as a result of this new demand, have been subjecting themselves to higher rental rates. Consequently, it is not surprising to see that rental rates increasing by 10% in the past two years alone. This is also an indication of continued interest in downtown condominium living – especially in the sub-40 year-old urban demographic.

In addition, some potential buyers have been squeezed out of the market due to new CMHC mortgage underwriting regulations, forcing them to remain in the rental market. While mortgage rates remain near all-time lows, landlords are definitely benefitting from lower carrying costs and higher rental revenue. In fact, many of our Axon client investors have now been able to achieve double digit returns on their equity on many of the properties we have acquired for them recently.

Therefore, it is simply a matter of when those potential buyers sitting on the sidelines recognize that once they have a reasonable amount of down payment available, how much cheaper it actually is to buy versus rent given today’s historically low mortgage interest rates. Until then, they will continue to face Toronto’s 1% vacancy rental rate – which has no signs of abating.

While many like to quote that interest rates are expected rise in the future, the amount that they actually do so, given that the world economies are still on the mend, is debatable. I often tell my investors and buyers that if they are really scared of high interest rates in the future, they can always get a 10 year mortgage at less than 4%.

Given this environment, if anyone is looking for an income property, this is one of the best times to acquire given that we have entered a more normalized condo resale market. On the flip side, renters that have some savings available should come forward in trying to find out how they can acquire a property sooner than later and carry it for less than they are paying for rent. Owning property protects the Tenant from unregulated rental increases (on properties built after Nov, 1991), landlord’s asking for their property back for themselves or their relatives to move in, and also from potential disposition by the landlord of the property.

As long as the Toronto downtown condo rental market remains healthy and renting instead of selling remains an option for investors, I expect condo prices to remain stable. Indeed, this is one of those times in the market when the shrewd investor looks at it as a perfect entry point.

 

If you would like to speak with me about your future real estate investments or switching from renting to owning, please do not hesitate to contact me at 416-929-1660 or email me at kaive.wong@axoncapitalrealty.com

 

Sources:

  • Urbanation’s Q1-2013 UrbanRental Report

Canary District Condos

Neighbourhoods Page » Corktown District

It has been announced that Dundee Kilmer (A partnership of Dundee Realty and Kilmer Van Nostrand) will be building Canary District, which will be the largest urban village in Toronto’s history!

  • Will house approximately 1,200 new units
  • Improved infrastructure including new roads and public spaces featuring the Front Street promenade and re-construction of Eastern Avenue and Cherry Street which will include a new streetcar route.
  • A brand new 82,000 square foot YMCA which will be used as a training facility during the Pan Am Games.

 

Here is a rendering of the Canary District master plan courtesy of talkcondo.com:

Launch dates are still unknown but contact us to be first in line with VIP first access when the time comes! Email resupport@axoncapitalrealty.com, call us at 416-929-1660 or fill out the form below.

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