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5 Steps to Buying a Rental Property
5-step guide to buying a rental property A rental property can be a great investment, but its a big commitment and the rules associated with being a landlord can be complex. These five steps will help you prepare. Step 1: See how much you can afford The price for a multi-unit or single-family property may be high, but rental properties have rental income to help offset your costs. This rental income, along with the amount of your down payment and your other income will help determine how much you can afford. Keep in mind that to qualify for a rental property mortgage, you need at least 20% for adown payment. When thinking about how much you want to spend on a rental property, make sure you also considerclosing costsand otherone-time costs. Use ouraffordability calculatorto see how much you can comfortably spend on a rental property. Step 2: Plan your budget Are you financially ready to buy a rental property? The numbers have to make sense when investing in real estate. Beyond the upfront costs, youll have to pay themonthly expensesthat come with owning any property, such asproperty insurance,property taxesand upkeep. Youll also need to budget for ongoing expenses associated specifically with being a landlord, such as repairs for damage from tenants and mortgage payments in case of vacancy. Step 3: Get a mortgage pre-approval Gettingpre-approved for a mortgagemeans you can make an offer on a property with the confidence that youll be able to access the money you need to complete the purchase. Your pre-approval will also tell you how much your estimatedmortgage paymentswill be and lock in yourinterest ratefor a certain period of time. When getting a pre-approval, lenders will need information about you and the property you plan to buy. Property information may include the approximate purchase price (youll know from the affordability calculator in step one) and rental income. Step 4: Search for a property and make an offer Location, location, location but there are other factors too. Here are some things to think about when searching for a rental property: Do you want it to be close to home? If you need to regularly visit the property, it will be easier to manage if its nearby. Are there already tenants living on the property? Ideally the answer is yes because a rental property with existing tenants provides immediate income. Will the property be easy to rent? Investing in a property thats in a neighbourhood with high demand for renters can help minimize long vacancy periods. Does the property need repairs? If you need to hire professionals to take care of immediate repairs, take the cost into consideration. Now you can useRealtor.cato find rental properties for sale in your desired area and price range. Location, location, location but there are other factors too. Step 5: Learn about landlord and tenant laws Do some upfront research to learn whats involved in being a landlord. Find out about local services such as your landlord association and tenant board, and read about your rights and responsibilities when it comes to things like choosing tenants, property maintenance and eviction procedures. Many provinces have fines for landlords who dont live up to their obligations. Thats an extra expense you probably dont want. Owning a rental property can be very rewarding when you do appropriate planning. As a landlord, you have the potential benefit from increases in your propertys value, as well as a regular stream of rental income. Over time, this can help you build a more financially secure future. * Article originally published by Manulife Bank of Canada. November 2018
To help make homeownership more affordable for first-time home buyers, Budget 2019 introduces theFirst-Time Home Buyer Incentive. The Incentive would allow eligible first-time home buyers who have the minimum down payment for an insured mortgage to apply to finance a portion of their home purchase through a shared equity mortgage with Canada Mortgage and Housing Corporation (CMHC). It is expected that approximately 100,000 first-time home buyers would be able to benefit from the Incentive over the next three years. Since no ongoing payments would be required with the Incentive, Canadian families would have lower monthly mortgage payments. For example, if a borrower purchases a new $400,000 home with a 5 per cent down payment and a 10 per cent CMHC shared equity mortgage ($40,000), the borrowers total mortgage size would be reduced from $380,000 to $340,000, reducing the borrowers monthly mortgage costs by as much as $228 per month. Terms and conditions for the First-Time Home Buyer Incentive would be released by CMHC. CMHC would offer qualified first-time home buyers a 10 per cent shared equity mortgage for a newly constructed home or a 5 per cent shared equity mortgage for an existing home. This larger shared equity mortgage for newly constructed homes could help encourage the home construction needed to address some of the housing supply shortages in Canada, particularly in our largest cities. The First-Time Home Buyer Incentive would include eligibility criteria to ensure that the program helps those with legitimate needs while ensuring that participants are able to afford the homes they purchase. The Incentive would be available to first-time home buyers with household incomes under $120,000 per year. At the same time, participants insured mortgage and the Incentive amount cannot be greater than four times the participants annual household incomes. Budget 2019 also proposes to increase the Home Buyers Plan withdrawal limit from $25,000 to $35,000, providing first-time home buyers with greater access to their Registered Retirement Savings Plan savings to buy a home.
Bank of Canada maintains overnight rate target at 1 ¾ per cent
The Bank of Canada today maintained its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 2 per cent and the deposit rate is 1 per cent. Recent data suggest that the slowdown in the global economy has been more pronounced and widespread than the Bank had forecast in its January Monetary Policy Report (MPR). While the sources of moderation appear to be multiple, trade tensions and uncertainty are weighing heavily on confidence and economic activity. It is difficult to disentangle these confidence effects from other adverse factors, but it is clear that global economic prospects would be buoyed by the resolution of trade conflicts. Many central banks have acknowledged the building headwinds to growth, and financial conditions have eased as a result. Meanwhile, progress in US-China trade talks and policy stimulus in China have improved market sentiment and contributed to firmer commodity prices. For Canada, the Bank was projecting a temporary slowdown in late 2018 and early 2019, mainly because of last years drop in oil prices. The Bank had forecast weak exports and investment in the energy sector and a decline in household spending in oil-producing provinces. However, the slowdown in the fourth quarter was sharper and more broadly based. Consumer spending and the housing market were soft, despite strong growth in employment and labour income. Both exports and business investment also fell short of expectations. After growing at a pace of 1.8 per cent in 2018, it now appears that the economy will be weaker in the first half of 2019 than the Bank projected in January. Core inflation measures remain close to 2 per cent. CPI inflation eased to 1.4 per cent in January, largely because of lower gasoline prices. The Bank expects CPI inflation to be slightly below the 2 per cent target through most of 2019, reflecting the impact of temporary factors, including the drag from lower energy prices and a wider output gap. Governing Council judges that the outlook continues to warrant a policy interest rate that is below its neutral range. Given the mixed picture that the data present, it will take time to gauge the persistence of below-potential growth and the implications for the inflation outlook. With increased uncertainty about the timing of future rate increases, Governing Council will be watching closely developments in household spending, oil markets, and global trade policy. Information note The next scheduled date for announcing the overnight rate target is April 24, 2019. The next full update of the Banks outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time. https://www.bankofcanada.ca/2019/03/fad-press-release-2019-03-06/