Investing in property has become wildly popular and lucrative in the past decade. People are buying, selling, and renting properties, trying to make money. To be in this type of business, one must educate himself first. It is easy to lose money if you are not familiar with what you’re doing. Buy to let strategy for Americans in Canada is one of the more useful ways of creating an active income.
However, there are many crucial factors to think about, before closing the deal and purchasing a property.
Buying a property in Canada
While there are some differences in purchasing a commercial property in the US and in Canada, the principle remains the same. You invest an amount of money into buying a house, apartment, or any type of building, and rent it to generate income.
However, the way you buy this property plays an important part in everything that follows.
Buying with 100% cash
This option is difficult for many because it is not easy to save money in the entire value of a property. However, it is the most convenient way to purchase, because you don’t have any debts or interests to pay.
Applying for mortgage
The more common and easier way of purchasing a property is with a mortgage. Nevertheless, even in this case, you have to decide if it’ll be interest only or a capital repayment mortgage.
Interest only mortgage is usually the best option for investors. This is a great way to purchase if you are looking further into future plans. In short, you are only paying monthly fixed interest on a mortgage. The loan balance remains the same unless you decide to pay more.
A capital repayment mortgage is the best buy to let strategy for Americans in Canada. Technically, if you buy a property and rent it to a tenant, the tenant will pay off the property for you. If the rent is higher than the monthly mortgage rate, you’ll make additional money as well.
Buy to let strategy for Americans in Canada
If you are planning to buy a house in Canada and rent it for a period of time, there are many strategies you can use. Nevertheless, if at some point you decide to move to Canada yourself, Neeley’s Van and Storage is an example of a quality moving company that should make your relocation smooth and easy.
However, since that may be further down the road, first let’s look at what is the best buy to let strategy for Americans in Canada. There are two ways you can make money by renting:
- monthly rental income
- growth in the capital value of the property over a certain period of time
Renting to a single professional
This is the most traditional way of renting a property. You find someone looking for a place to live while working. Whether it’s a single person or a family is not that important. The return is not as high as with other buy-to-let strategies. However, the income is steady and it is the easiest way.
If you have friends or family coming to Canada, and you have a property there, this is an excellent option for you. Connect them with local relocation specialists from Sudbury for a quick relocation, and you’ll have a mutual benefit from this situation. They will have a place to live, and you will have someone to pay the rent.
Ever heard of people renting a room? This type of renting is called HMO. If you own a house with multiple rooms, you can rent them separately to different people. Renting rooms generates more income than renting the entire property to a single occupant.
If you have three to four rooms at your disposal, rent each for $350 – $400 per month. It will earn you more money than renting the entire place for, let’s say, a $1000.
Many people are moving after being kicked out, and this is an excellent option for them. It is also great for students. Having a place like this close to a college is a gold mine.
Local Housing Allowance
Also known as Universal Credit, or DSS, this way of renting means finding housing benefit tenants. The terminology is a bit complicated, I know. It means you should find tenants where local authority pays the rent.
One benefit of this type of renting is that the rent fee is the same for all tenants. This way you know the exact amount of money you can count on. The local authority gives money to tenants, and they pay you. Just be sure to get the money!
Renting during holiday
Another buy to let strategy for Americans in Canada is to rent the property for holiday purposes. The biggest concern here is to achieve full occupancy during holidays, and the profit can jump sky-high. Still, the real profit is in the ability to rent the property for a lower price for the rest of the year.
I realize that this option doesn’t actually include buying the property, but it is essential you are familiar with it. As the name says, you rent a property at one price. Then, you rent it to another person at a higher price. The difference in rents is how much you earn monthly. Know that others can rent a property from you in the same manner, only to further rent it to someone else. There is another strategy for you here. If you are renting on a lease, there is always the option that a tenant can opt to buy a house for a fixed rate over a period of time.