Owning an investment property is most likely the safest and easiest way to increase and diversify any investment portfolio. Understanding the many regulations and criteria involved when you need to obtain a mortgage like a residential home loan or a mortgage for your rental property will help you avoid the pitfalls along the way.
Owning a rental unit or any other dwelling as an investment has become extremely popular especially The Town of Blue Mountain and surrounding Georgian Bay area where recreational activities like fishing, golfing and skiing are plentiful. Thornbury and Craigleith along with Meaford are showing big increases in property investment purchases.
If you want a quaint cottage or chalet in the Georgian Bay region for your investment property, where your renters will be plentiful as the area is a four seasons paradise, there is no off season. There are varying tax implications and restrictions within municipalities. However, a local Real Estate agent and/or Mortgage Agent will assist you in navigating these waters. They deal with it daily, so you might as well leverage their knowledge! Also if you are buying a rental property with multiple units keep in mind that the number matters in terms of financing and zoning laws. A mortgage agent and a local real estate lawyer will be a great resource.
When you are looking for an investment rental in Ontario, Canada you must consider how many rental units you are looking to manage and own. Zoning and financing of single unit rental property up to four total units are all considered residential so you can obtain a standard mortgage home loan. Five plus units within the investment property would require you qualify for a business or commercial mortgage which come with larger interest rates and stricter bylaws.
When acquiring a commercial mortgage for the larger rental unit you must consider if you will be living on site in your property. If you are going to be occupying one of the rental units then the rental property would be zoned as owner occupied. If you are not going to be living there, then your investment property would be zoned non-owner occupied and you will most likely have to pay a larger down payment to obtain the mortgage for your commercial investment property.
With a standard residential mortgage the process is similar to a standard home loan where you obtain a mortgage through a credit union, bank or other financial mortgage lender and make as much of a down payment as possible. If you do not make a twenty percent down payment most likely you will need to add on mortgage insurance premiums to your monthly mortgage payments.
In Ontario there will be provincial transfer taxes that vary per province with the average being about 1% for the first $200,000 and then 2% thereafter for the balance of the mortgage. Each municipality has levied property taxes that include school and other taxes that are based on the assessed value of your rental property. Working with a Mortgage Agent, Realtor and Real Estate Lawyer will allow you to clarify any tax implications.
Depending on the ownership, you can benefit annually with tax deductions such as operating expenses, furniture and deprecating equipment along with property taxes, second mortgages and other lines of credit you have obtained. Owning an investment property is a strong investment that will reap you many benefits throughout the years of ownership. Having a steady income and an appreciating asset while paying down your mortgage can only be viewed as a positive and a strong asset to hold…especially in the Blue Mountains and surrounding region. There are deals to be had and investments to be made. Good luck!