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A Guide To Canadian Real Estate Investing

Jun 14th 2015 at 10:49 PM

 

Most individuals consider real estate investments are a way of building a nest egg. Therefore, they will purchase properties that will give them good money in the end. These guidelines will help you create wealth with your property.

Always opt for excellent properties

Real estate investments have become a hot topic in Canada in the last few years, with more investors opting to own property. This is primarily because of the favorable immigration laws, economic conditions, and factually low interest rates.

When investing in real estate to make money, it is best to opt for properties that generate a positive cash flow. This means that the rent you get from your tenants should be adequate to cater for the mortgage payments, property utilities, insurance bills and taxes. You should also budget approximately ten percent of the income to pay for any minor repairs that regularly arise.

Hire experienced agents

Ensure that you always work with a real estate agent who is highly experienced in Canadian real estate investing. Getting a broker that also invests in property can also work to your advantage. This is because such professionals understand the property market in their locality. Therefore, they will help you avoid any pitfalls.

Keep records

A property owner should always have records of the expenses and the income obtained from investment properties. It is best to have a separate account for your properties as it makes tracing easier especially when you have to file tax returns every year. This is important regardless of whether your real estate is in a company name or your personal name.

Partnerships

When buying property with a partner, you should ensure that you have an appropriate joint venture or partnership agreement. This agreement should protect the interests of all parties involves especially if things do not turn out as expected. Provisions must be made if one of the associates wants to sell the property while the other does not, one of the partners is not paying the expected share of expenses and what happens when one of the associates dies. You should also have a list of desirable personal hard money lenders and conventional financiers.

Avoid buying and selling real estate quickly

This is because the Canada Revenue Agency will see this activity as a business income. Therefore, you will have to pay taxes on all the profits that you make from all your investments. It is better to purchase real estate for the long-term, rent them out and use the cash flow gained to lower your mortgage credit.

The Canadian laws tend to be quite liberal with regards to real estate property investment. An investor must not be a resident in the country or even be a Canadian citizen. Furthermore, interest expenses and property taxes are tax deductible. However, for investors to make profits, they should be conversant with tax implications in different investment stages from owning the real estate, renting it or inhabiting it and even selling the property.

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