Have you ever pondered on the idea of snapping up a few units in that great downtown Waterloo condo building, or that sweet little house conveniently located not too far from the college campus? But not for yourself, as a rental property to bring in some extra income and add to your overall asset portfolio?
No, we’re not going to deny it, being a landlord(lady) is not always a walk in the park but if you vet tenants carefully and have a solid plan investing in a Waterloo Region property as a rental prospect, especially if the rent covers your own mortgage expenses, can be a real winning proposition. Here are five key ways that owning a Waterloo Region rental property can boost your net worth and your day to day quality of living.
1. Cash Flow Creation
Cash flow is key to wealth building and rental properties are a relatively straightforward way to create it, free of the hassles of some other investment opportunities (such as playing with the often volatile stock market.
2. Cash Flow Means an Early Mortgage Pay Off
Chances are that you still have a mortgage on your primary residence. The cash flow from a rental can not only help you pay off that faster but when you have any loan taken towards the cost of the rental property can be paid off faster as well.
Extra tip: Reinvest as much of the positive cash flow to pay down your mortgage balance as soon as possible. The quicker you can pay off your mortgage, the sooner you’ll have money that’s for you, not your bank manager.
3. Someone Else is Paying for You to Live
As you use the monthly rental funds from your tenants’ payments toward your mortgage, you are actually paying down your loan amount. Keep that property rented for at least 15 to 20 years and you can own that house free and clear without a penny more out of your pocket. It’s a simple, but rather wonderful, concept.
4. Tax Advantages Galore
Another great aspect of wealth building, at least from a purely from an accounting point of view; it’s “on paper.” There are numerous tax benefits to being a landlord, which include depreciation, rental expenses, and mortgage interest deductions you can claim each and every year that you rent out the property.
5. Buy Low, Improve, Rent High
As long as you understand what might need to be done don’t discount that ‘needs TLC’ property if it’s in the right area, near a college for example, or in an up and coming part of town. If you buy a slightly run-down property that was poorly managed and you improve it, you’ll not only significantly boost its value – and your equity- but you’ll also increase its rentability and the amount you can realistically charge tenants for that much-improved place to call home.