Investing in a Rental Property

Posted by The Radcliffe Team on Thursday, July 30th, 2020 at 10:00am.

Things to consider when purchasing a rental property:

1. Does a purchase make financial sense?

  • A minimum of a 20% down payment is required when purchasing a rental property.
  • Investing in a rental property should be considered a long-term investment that helps build capital.
  • Consider whether your real estate investment has the potential to provide a better return when compared with other investments.
  • You will have to pay land transfer tax – this is paid by the buyer when possession of the property is taken.
  • When you sell your rental property, you will have to pay capital gains taxes.
  • The First Time Home Buyers’ Plan and land transfer tax rebate for first time home buyers can only be applied to your primary residence.

2. How is the local rental/job market?

  • The number of rental properties for sale in a neighbourhood can impact the price you’ll pay.
  • A healthy and growing job market will likely spur demand for housing and may result in rising rental income.
  • A growing area with major improvement projects planned (like a mixed-use retail residential development, subway stop or health clinic) could make the location more attractive to potential renters

3. Landlord Duties

  • Landlords are legally obliged to ensure that a rental unit complies with the rules and regulations pertaining to minimum standards for:
  • Before renting a property, it must meet municipal standards, zoning bylaws, fire safety regulations, and local building codes.
  • You may need to obtain a rental license, which is required for any rental property with four units of less.
  • Landlords are legally obliged to ensure that a rental unit complies with the rules and regulations pertaining to minimum standards for:
  1. Maintenance
  2. Housing
  3. Health & Safety
  • It is also the landlord’s responsibility to ensure that acceptable standards are maintained through the duration of the tenancy. This includes:
  1. Maintaining the state of the home and ensure it is fit for inhabitation.
  2. Ensuring a reasonable supply of fuel, electricity, hot and cold water and other utility services – unless the tenant has agreed to pay for these services.
  3. Not interfere with the reasonable enjoyment of the premises.
  4. Not seize, without legal process, a tenant’s property for rent default or for the break of any other obligation of the tenant.
  5. Not harass, obstruct, coerce, threaten or interfere with the tenant.

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