Buying a rental property can be a great investment opportunity, but it’s important to understand the unique factors involved in purchasing an investment property. From the down payment requirements to understanding new tenancy rules, there are several things you should keep in mind before making a purchase. In this blog post, we’ll take a closer look at three key factors to consider when buying a rental property.
20% Down Payment Required
One of the biggest differences between buying a rental property and buying a primary residence is the down payment requirement. For an investment property, you will typically need to put down a minimum of 20% of the purchase price as a down payment. This can be a significant amount, but it’s important to have a healthy down payment in order to secure financing and set yourself up for long-term success as a landlord. Keep in mind that the down payment requirement may vary depending on the lender, so it’s important to shop around and compare options.
Real Estate Law: New Tenancy Rules
As of December 11, 2017, new tenancy rules were implemented that limit the circumstances under which a landlord can remove a tenant from a property. If you plan on having a long-term tenant, this may have less of an impact on you. However, if you intended to rent to students during the school year and tourists during the summer, you need to be aware that you cannot remove a tenant from the property unless they agree to leave. Additionally, if you’re purchasing a property with an existing tenant, it’s important to understand the current rent being charged, as you will be bound to this rate and will be limited in how much you can increase the rent each year.
A Strata Property May Have Rental Restrictions
If you’re purchasing a strata property, it’s important to understand that there may be restrictions on renting out your unit. Under new rules, British Columbians will only be able to rent out their primary residence and one additional secondary suite as a short-term rental. This means that if you’re investing in a strata property with the intention of renting it out, you may need to look for alternative options or consider converting the property into a long-term rental.
When it comes to buying a rental property, it’s important to consider all the factors involved in being a landlord. From the down payment required to new tenancy rules and rental restrictions in strata properties, there are unique considerations to keep in mind. By doing your research and understanding these key factors, you can invest in a rental property that will provide consistent income for years to come.
PATRICK A. BELL – Lawyer at Bell, Jacoe & Company in Summerland BC provides legal help with real estate and wills and estate law.