When owning Real Estate Cash Flow is king. This blog will demonstrate the importance of cash flow in owning an income property and 4 ways to purchase a cash flow income property.
Houses are appreciating at a faster rate than normal, the real key to establishing wealth, is creating a residual income stream. By purchasing an investment property, tenants will pay for your mortgage and can create an income stream in excess of those expenses.
The benefit of owing an income property is so that you can:
- Put aside money for any unexpected items that may come up over time like repairs to roof, furnace etc. or
- Pay down your mortgage faster
- Save towards another rental property.
Let us help educate you on how to become mortgage free. Wouldn’t it be nice to know that in excess of your annual income, that you then had a secondary source of passive income to supplement your lifestyle or save for your retirement.
Here are 4 ways to create wealth through owning Real Estate:
- Fixer Upper:
- The benefit of purchasing this kind of property is that you are generally purchasing it under market value.
- Purchase a property outside the GTA.
- Just because you live in Toronto doesn’t mean your investment property has to be in Toronto.
- Areas that are still affordable to purchase in include Mississauga, Brampton, Hamilton, St. Catharines, Barrie, Oshawa and Ajax.
- An article in the Toronto Star on October 13th stated that strongest home price gains in the third quarter of 2016 were in 905 areas.
- Regions that once were industrial hubs have begun to gentrify as they transform into commuter cities housing many young professionals looking for more affordable homes.
- In Oshawa and Whitby house prices soared 26% and 21.5% respectively in the third quarter of this year but are still more affordable than Toronto.
- In St. Catharines and Hamilton house prices increased over 15% annually
- Purchase a single family home and then renovate it
- As long as you are prepared to apply to legally convert the property, into a duplex, triplex or fourplex.
- Sometimes this conversion can be done without needing city approval, but by strictly adhering to building and fire code, converting the basement into one unit.
- A back door in a 5 level back split allows a second unit. And the front door allows a third.
- I would be happy to discuss how other clients have created these conversions.
- Purchase a home with a secondary suite.
- I have clients who are living expense free, because they have moved into a basement apartment and have rented out the remainder of the house.
- That rent generally covers the mortgage and taxes.
- A second option is to live in the main house and let a tenant pay rent the basement.
- Call us to set up a time to discuss how we can help you purchase a cashflow income property.