Tight rental markets in Alberta and other areas of Canada, are offering excellent opportunities for those looking to invest in income property. I would highly recommend holding an investment property in your portfolio along with your stocks, mutual funds and GICs. Managing an income property is definitely not for everyone but it is well worth educating yourself on the pros and cons of being a landlord.

It is not as easy as it used to be to qualify for financing for the purpose of purchasing a revenue properties. The minimum down payment on a revenue property is 20%. In order to avoid CMHC insurance premium, you would have to come up with a down payment of more than 35% of purchase price. CMHC Premiums - Up to and including 65% LTV premium 1.25%, Up to and including 75% LTV premium 1.75% and Up to and including 80% LTV premium 2.50%.

Where are you to come up with the down payment? Ideally you would have saved the funds needed for the source of down payment. You might also have built up enough equity in your current home property, to be able to refinance drawing enough equity to use as your source of down payment. If for instance you draw equity out of your home by way of a secured line of credit, you can write off any interest on funds used as your source of down payment. Make certain that you are prepared to have documentation available to prove to Revenue Canada any interest paid, in relation to funds used as your source of down payment.

If I could turn back the clock to when my husband and I first invested in a home, I would definitely have done things differently. I would highly recommend to first time home buyers to try and purchase a property not thinking of it as a permanent residence but as a future investment property. Look for a home located in a favorable location - example, close to LRT, inner city or perhaps university. Look for a home (perferably not a condo) that is in a R2 zoned area with a legal up-down suite. Thoughts are to live in this property and  rent the basement suite.  Remain in this residence until such time as you have saved another 5% down payment for a home that you intend to stay in for a longer period of time.  Don't forget that when buying that second property, you now have to qualify to carry two mortgages. You will now have rental income from your original property, that will hopefully be sufficient to carry both mortgage payment plus property taxes. For many smart investors, this is the way that they got started on owning income property.

Under CMHC guidelines, you are able to have two properties that are insured under CMHC. 

 Click Here to download CMHC pamphlet describing Income Property Information. 

I look forward to hearing from you and discussing your take on owning Revenue/Income Property.

Connected to your dream of home ownership - Marg Scott - Mortgage Broker Canada Online Mortgage Inc.