Back to School…Investment Opportunity
If you have kids that have just recently left home to either start or go back to university then here is an opportunity for you.
All over Canada there are students and their parents everywhere that are helping to pay down a landlord’s mortgage. In some cases its necessary; but in many cases it’s not.
Let’s say a landlord is charging $500/month. Multiply that by 9 months and your cost out of pocket is $4,500/year…and what do you have to show for that?
Buy a 3 bedroom property with a finished basement for your son or daughter, and put 2 roommates upstairs and 1 in the basement…and charge them $500 each. At the end of the 9 months you have $13,500 + the $4,500 you saved in rent paid to a landlord. Even if you don’t rent this property out over the summer… With a 20% down payment at these interest rates…it’s possible to have a mortgage payment of under $1,000/month. As well…you likely now have a taxable deduction. At $1,000/month plus property taxes you are looking at taking in nearly having enough income to cover the costs of the property. You would definitely be in a better position than just paying someone $4,500 in rent.
When your child is finished school…you could keep this property as an investment and use as a rental. Also…keep in mind that the property is likely appreciating by at least 4%/year in value…so you could always sell it and make a profit.
This is something that many many parents are looking into doing as the idea has merit. So think about it…and if you have any questions…just let me know. Yes…It’s a little bit of work; but its well worth it
BTW…don’t worry too much about the fact that the property is in another city and you’re not there. You could hire a property management firm that handles everything from renting out the rooms to collecting the rent, and handling any maintenance issues that could arise. Typically these companies will only charge about 5% of your monthly rental income – in this case $75/month.