Attending Post Secondary
If your child is going to Trent University or Fleming College, consider buying a home or condo that they can live in, and perhaps share with a fellow student who pays you rent. It can be a good alternative to paying thousands of dollars toward residence fees or rent. And it’s a real estate investment for you with at least one guaranteed tenant — your child!
Things to Consider
- The rental income can pay many of your costs. Just remember to declare it on your tax return.
- As a landlord, you can claim many of your expenses, including mortgage interest. Assess your costs carefully before you buy. They will vary with the local real estate market, mortgage rates and other factors.
- Plan for some vacancies. Your child (or their roommate) may not stay in the place over the summer break.
- You’ll increase your equity in the property as you pay off any mortgage. And the value of the property may rise over time. This can offset your costs. But whether you do more than break even depends on what happens to housing prices in the area.
Do your research if you’re thinking of buying a rental property as an investment and to create income. Before you start looking, know how you plan to finance your purchase. You must have a down payment of at least 20% of the purchase price when buying a property that is not your principle residence.
3 Questions to Ask Yourself
- How will you finance it?
- How much income can it generate?
- How much will it cost to maintain it?
5 Things to Know
- The local real estate market – Prices and growth rates vary.
- The local rental market – Rents and vacancy rates. Do you have potential tenants already in place?
- The costs – Factor in start-up and ongoing costs.
- A landlord’s rights and responsibilities – Ask your real estate agent or read Help for Landlords.
- Your future tenants – Screen applicants and run credit checks.
Factor in Vacancy Rates
As a general rule, allow for a 2.5% - 5% vacancy rate in your financial plan. According to CMHC, vacancy rates vary across Ontario. The Report from Canada Mortgage Housing Corporation (CMHC) reported the Vacancy Rate in Peterborough in 2019 was 1.5%
To get an idea of how rents can vary in Peterborough and the surrounding area click HERE
SOURCE: For more information and additional resources CLICK HERE GetSmarterAboutMoney.ca is an initiative managed by the Ontario Securities Commission's Investor Office to help people make informed financial decision
Trent University
Located in the beautiful North-end of Peterborough, Trent University has become an increasingly respected institution of Post Secondary Education. Recently unveiled to be the #1 Primarily Undergraduate University in Ontario by Maclean's magazine, you can expect both an excellent education as well as an exceptional student experience from Peterborough's own Trent University.
Fleming College
Fleming College, also known as Sir Sandford Fleming College, is an Ontario College of Applied Arts and Technology boasting four beautiful campuses one of which being in Peterborough.
CENTURY 21 United Realty Inc. Brokerage
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CENTURY 21 United Realty Inc. Brokerage
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(705) 743-4444
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