Explaining TRESA in Plain Terms

The Trust in Real Estate Services Act (TRESA) took effect on December 1, 2023, replacing the 20-year-old Real Estate and Business Brokers Act (REBBA). The new Act brings better consumer education and transparency to the buying and selling experience and is designed to protect the best interests of the client (buyer or seller).

Whether you’re buying or selling now or in the future, we break down the main concepts of TRESA to help you navigate the new rules.

Clients, not customers

In the previous REBBA, an agent could work with a buyer or seller as either a “client” or a “customer.” In the new TRESA, any buyer or seller working with an agent is now called a “client.” This shift was to remove the confusion around who is a client and who is a customer, with any party represented by an agent now referred to as a client. A seller choosing not to have an agent represent them is now called a self-represented party (SRP). In this case, the seller is responsible for the listing price, staging, marketing, organizing showings, and negotiating offers. While this may save the seller real estate fees, it comes with inherent risks, specifically the absence of professional advice from a licensed broker with the experience to price a home correctly and negotiate the deal on their behalf.  

Changes around representation

Until now, real estate agents could act as multiple representatives, meaning they could represent both the buyer and seller in a sales transaction. Those situations sometimes resulted in limited disclosure and a buyer whose best interests were poorly represented. With the recent changes, the buyer and seller can be assured they will have their own designated representation. This means that if one brokerage represents both the seller and buyer, they will each have their own agent who will act in their best interest. This allows agents from the same brokerage to disclose more information and represent the best interests of their clients.

New code of ethics

The new code of ethics was designed to protect the client (buyer or seller) and ensure their best interests are the agent’s top priority. Now, agents and sellers are required to disclose all known information about a property that may impact the buyer’s decision to make an offer and for how much. Personal information about the buyer or seller must remain strictly confidential and cannot be shared with anyone outside the brokerage without the expressed written consent of the client, even years after a sale. Agents must also avoid any situation that can be considered a conflict of interest and affect their ability to act in their client’s best interest. If a conflict arises, the client must be informed, and the agent may not continue their representation without the client’s written consent. 

Transparent offer process

The new additional transparency clause means that sellers can now share the details of competing offers with buyers. Personal information remains private; however, the seller can decide whether to hold open or closed offers. If the seller chooses an open offer process, the buyer would be informed of competing offers, including prices, terms, conditions, deposits and closing dates. The seller can also change their mind at any time so long as the agent includes the clause in their agreement. 

The RECO information guide 

The Real Estate Council of Ontario (RECO) is the governing body of real estate professionals in Ontario. The new guide was designed to hold agents accountable for any non-compliance issues related to TRESA and may suspend or revoke an agent’s designation once a complaint is investigated. Under the new Act, each buyer and seller will receive the RECO Information Guide upon agreeing to representation with a broker. The guide provides all the need-to-know information to help buyers and sellers navigate the real estate transaction. 

While the new Act contains a lot of changes, the main takeaway for buyers and sellers is greater transparency, better protection, and more choice in agent representation. 

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Tips for ImprovingYour Credit Score Before Applying for a Mortgage

For many people, buying a home is a significant milestone in their lives. However, getting approved for a mortgage isn’t always a straightforward process. One of the most critical factors that lenders consider when evaluating your mortgage application is your credit score. A higher credit score can help you secure a better interest rate and save you thousands of dollars over the life of your loan. If you’re planning to buy a home in the near future, it’s crucial to focus on improving your credit score. Here are some essential tips to boost your credit score before applying for a mortgage.

1. Check Your Credit Report

The first step in improving your credit score is to obtain a copy of your credit report from all three major credit bureaus: Equifax, Experian, and TransUnion. Review your report carefully for any errors, such as incorrect account information or unauthorized inquiries. Dispute any inaccuracies with the credit bureau to have them corrected. A clean and accurate credit report is the foundation of a healthy credit score.

2. Pay Your Bills on Time

Consistently paying your bills on time is one of the most important factors that affect your credit score. Late payments can have a significant negative impact on your credit history. Set up payment reminders or automate your bills to ensure you never miss a due date. Remember that even one late payment can damage your credit score, so it’s crucial to stay on top of your financial obligations.

3. Reduce Credit Card Balances

The amount of credit you’re using compared to your available credit, known as your credit utilization ratio, plays a vital role in your credit score. To improve your credit score, aim to keep your credit card balances low. Ideally, you should aim to use less than 30% of your available credit. Paying down high credit card balances can have a positive impact on your credit utilization ratio and boost your credit score.

4. Avoid Opening New Credit Accounts

Every time you apply for a new credit card or loan, a hard inquiry is made on your credit report. These inquiries can temporarily lower your credit score. If you’re planning to apply for a mortgage in the near future, it’s a good idea to avoid opening new credit accounts. This will help keep your credit report free from recent hard inquiries.

5. Keep Old Accounts Open

The length of your credit history is another factor that influences your credit score. Older accounts can have a positive impact on your credit score, so avoid closing them, even if you’re not using them regularly. Closing old accounts can reduce your credit history’s average age, potentially lowering your credit score.

6. Diversify Your Credit Mix

Lenders like to see a mix of different types of credit accounts, such as credit cards, installment loans, and mortgages. Having a diverse credit mix can have a positive impact on your credit score. If you have only credit cards, consider adding an installment loan, like a personal loan or a car loan, to your credit profile to demonstrate responsible credit management.

7. Work with a Credit Counselor

If you’re struggling with a low credit score and don’t know where to start, consider working with a credit counselor. A reputable credit counselor can help you create a plan to improve your credit and provide valuable guidance on managing your finances more effectively.

A strong credit score is essential when applying for a mortgage. By following these tips and consistently managing your finances responsibly, you can improve your credit score and increase your chances of securing a favourable mortgage rate. It may take some time, but the effort you put into boosting your credit score will be well worth it when you’re able to purchase your dream home with confidence.

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5 EYE-CATCHING WAYS TO UPDATE YOUR HOME5

Your home is a reflection of you, and your decor should match your tastes. With some simple home upgrades, you can create the perfect space for you and your family, even if your design preferences change over time.

Consider these ideas to get started:

ADD A FRESH COAT OF PAINT

One of the easiest home improvement projects, a fresh coat of paint can change the entire look of a room. Whether you choose to paint the entire space one new colour, opt for an accent wall in a vibrant shade or simply freshen up the trim, paint can go a long way toward adding visual appeal and reflecting your personality. Patterned wallpaper, board and batten, stone and tile can also be added to create textured accents.

BRING WARMTH AND AMBIENCE WITH A FIREPLACE

More than 3 in 5 homeowners have a fireplace or other hearth product in their homes and including a fireplace in your construction or renovation plans is a gift of warmth, comfort and ambiance you can give yourself. Whether it’s a centerpiece for your living room or family room, or an accent to your bedroom, bathroom or study, a fireplace can provide an artful design element for your home and a safe, reliable heat source in the event of unexpected weather.

UPDATE LIGHTING FIXTURES

Proper lighting can bring rooms to life and make spaces look larger and more welcoming. You can brighten up your home in a variety of ways, from strategically placing table and floor lamps that fit your design style to replacing older ceiling and wall-mounted fixtures with more modern styles.

GIVE CABINETS A FRESH LOOK

There are numerous easy ways to update your kitchen and bathroom cabinets to create a more updated look. One of the easiest is swapping out older cabinet pulls and knobs for more modern options. With a variety of finishes – stainless, bronze, brushed nickel, black, copper and more – and styles available, you can match your cabinets to nearly any design style in a matter of minutes. Adding a coat of stain or paint is also a relatively quick and easy way to update some of the most-used spaces in your home without completely replacing the cabinets.

UPCYCLE FURNITURE

You can breathe new life into your current furniture by making simple changes. The easiest would be simply rearranging your pieces and moving some to different rooms to create an updated look. You can also add decorative covers to sofas, chairs, throw pillows and more, or take your upcycling a step further and refinish a bookshelf, table or other wooden furniture with a fresh coat of paint or stain, or give it a more weathered look with some sandpaper.

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Leveraging Your Home Equity to Help Purchase a Home For Your Children: A Prudent Move?

Navigating Parental Assistance in Home Purchases

The concept of parents aiding their children in stepping onto the property ladder is not a new one, but it has become more common recently as the value of first homes in metropolitan areas has soared. A 2021 CIBC report illuminated that 30% of first-time homebuyers in Canada were bolstered by familial financial support, with the average monetary contribution oscillating around $82,000, and surging to $130,000 and $180,000 in the metropolitan hubs of Toronto and Vancouver, respectively. While it may be assumed that such substantial parental contributions are often derived from debt, CIBC estimates that a mere 5.5% of parents resort to borrowing to facilitate their children’s home purchases.

Strategizing Financial Assistance for Your Offspring’s Home Acquisition

Parents can explore various avenues to financially assist their children, such as utilizing a Home Equity Line of Credit (HELOC) or procuring a mortgage. HELOC’s, often hailed for their flexibility and lower payment requisites, typically necessitate interest-only payments. Conversely, mortgages, while generally offering lower interest rates, demand blended payments, encompassing both interest and principal, and therefore have a more pronounced impact on cash flow.

If the debt is envisioned as a short-term obligation, potentially preceding a downsizing, the rationale for using a HELOC is apparent. However, it’s imperative to navigate this financial strategy without precipitating your own downsizing or impeding your children’s progression. 

Ensuring Financial Prudence

Embarking on this financial journey necessitates adherence to standard approval criteria, which may pose challenges, particularly for retirees with diminished or investment-derived incomes. While reverse mortgages emerge as a viable alternative should traditional financing prove elusive, exercising caution to safeguard your own financial stability in retirement is paramount. Additionally, with the potential for fluctuating home prices and the risk of not realizing anticipated returns from a home sale, a meticulous approach is crucial.

If your financial portfolio includes investments, particularly within a taxable non-registered account or a Tax-Free Savings Account (TFSA), utilizing these funds prior to resorting to borrowing may be a smart strategy, especially in an environment where achieving a return on investments that exceeds your debt’s interest rate proves challenging.

Navigating the Complexities of Purchasing a Home for Your Children

Parents must tread cautiously when considering purchasing a home for their children, particularly if their children are unable to qualify for a mortgage independently, signaling potential financial instability. If the funds are intended as a gift, with no expectation of reimbursement, the scenario alters somewhat. However, you need to ensure that your generosity does not inadvertently saddle your children with a financial burden they cannot sustain.

Moreover, purchasing the property in your name, as opposed to your child’s, introduces potential complications, such as capital gains tax liabilities should the property appreciate in value. Furthermore, maintaining ownership of the property may become complex, especially if your child enters into a relationship and their partner resides in a home owned by their in-laws. Despite benevolent intentions, the desire for autonomy may prompt your child and their partner to seek ownership of their dwelling, rather than residing ‘under your roof’ until inheritance occurs.

Make sure you seek professional advice from your mortgage broker, lawyer and accountant before embarking on any of these strategies to help your kids.

BY JASON WOODS

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2023 Market Update: What’s the Latest?

The real estate market has navigated a challenging year so far in 2023 with higher mortgage rates, and various economic and employment factors affecting sales and prices. 

In the first quarter, we saw a shift from a seller’s market to a more balanced one, with home sale prices dropping slightly and bidding wars coming to an end. Buyers were finally seeing more stable prices, yet inventory remained relatively low as sellers waited by the sidelines to see if the Bank of Canada would raise interest rates again. While home prices fell slightly early in the year, they remained higher than in the same period a year before, and everyone expected that the market would begin to pick up heading into the summer months, with buyers gaining confidence to make a move. 

The GTA market remained remarkably stable throughout the spring and summer before the BoC hiked interest rates by a quarter percent in each of June and July. These latest increases triggered a shift from a seller’s market to a buyer’s market for the first time since 2009. Buyers appear to be taking stock of their financial situation and analyzing their mortgage affordability. At the same time, a massive influx of new listings hit the market in August and September, pushing inventory up although sales activity was down. Despite this shift, house prices in the GTA continued to increase, with the average detached home listed at $1,119,428, a 3% increase, year-over-year. 

The story so far this fall has been very different. The GTA saw an 8% drop in home sales during September 2023 compared to last year, and a 12% monthly decrease in sales overall. This change, coupled with a surge in homes hitting the market (32% up from August to September), brought the sales-to-new-listings ratio (SNLR) to 28.6% in September. An SNLR of 40% or less indicates a buyer’s market; an SNLR of 60% or higher indicates a seller’s market. To put this in perspective, the last time the 12-month SNLR was below 40% was in 1997. For today’s buyers, this is good news as they now have less competition, a more extensive home inventory selection, and less pressure during their search. 

In the Oakville and Milton region, we saw inventory rise during August and September by 41% over the same time last year and 13% year to date. Home sales showed a 16% decline for single-family homes in September over last year, while house prices remained about 3% higher. The surge in new listings has created a much higher inventory level than the area has seen in many years. Sales volumes have eased overall, yet prices remain high, with a median sale price of $1,020,000 compared to $971,500 in September 2022. 

Whether the recent October 25th BoC decision to halt interest rate increases will make any difference to buyers and sellers in the coming months is up for debate. Predictions for 2024 continue to favour buyers, and prices are expected to moderate even further while interest rates and inventory remain elevated. TRREB President Paul Baron suggests, “The short and medium-term outlook for the GTA housing market are very different. In the short term, the consensus view is that borrowing costs will remain elevated until mid-2024, after which they will start to trend lower. This suggests that we should start to see a marked uptick in demand for ownership housing in the second half of next year, as lower rates and record population growth spur an increase in buyers.”

By Julie Achtermeier

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Five Themes for Chilling Halloween Décor 

As the leaves drop and the autumn air cools, it’s time to transform your home into a spooky, eerie wonderland for little ghouls and goblins. Outdoor Halloween decorating is a fun tradition that lets you showcase your creativity while allowing your inner child to shine. To create your spine-tingling scene, consider these few ideas to keep decorating easy and affordable this year. Whether you prefer whimsy and friendly or downright terrifying, nailing down one key theme will dictate the overall look and feel of your outdoor décor. And for those DIY projects, be sure to get the kids involved!

Go for Humour
A popular decorating trend is to place life-size skeletons around your yard to look like they are performing daily household tasks like washing windows, mowing the lawn, or planting flowers. For extra fun, rearrange them every few days to give your neighbours something to discuss! Another classic theme sure to get a few laughs – a witch training camp displaying crashed broomsticks and witches pinned to trees or walls and a sign that reads Flight School. 

Put on a Show
To create a spooktacular scene, set up a white sheet inside a large front window and use a projection system to project moving shadows of ghosts, skeletons or creepy characters so they appear to be walking around your home. You can find Halloween projectors online for less than $100, and they often include up to 12 movies. Add a recording of creepy sounds, and you’ll surely stir up some neighbourhood terror. 

Ghostly Lighting
For a DIY ghostly effect, take tomato cages and turn them upside-down. Attach a beach ball or large Styrofoam ball to make a head, and add a string of white lights around the cage. Cover with a white sheet and create a ghost face cut out of black felt. Tape or glue to the sheet. Build several ghosts and place them around your front porch for a ghostly glow. For additional lighting, buy a string of white lights and cover in small white squares of material, tying around the light (head) to create a tiny ghost. Use a sharpie to draw eyes and a mouth, and hang the string of ghosts across your entranceway.  

Super-sized Spiders
A giant spider theme is an inexpensive way to jazz up your front décor. Purchase packages of spider webs at a dollar store or buy twine and follow a YouTube video to create a giant web for your front porch. Make giant homemade spiders by cutting two different-sized Styrofoam balls in half, gluing the smaller half to the large half (for the head and body), and covering them with faux fur. Attach wire for the legs and wrap the wire with foam tubes to create the illusion of giant spider legs. These are very lightweight and easy to hang around the yard. 

Eyes Everywhere
Keep a watchful eye on your trick-or-treaters with DIY glowing eyes hidden in trees or bushes. Grab some empty toilet paper rolls and cut out evil-shaped eyes. Paint the tubes black and tape a glow stick inside each one. Hide them in trees, bushes or shrubs around your front entrance. To add giant bloodshot glowing eyes, purchase a few closet push-lights from the dollar store and draw a giant eyeball on each one using a sharpie. Add red bloodshot squiggles for full effect. Once dark, turn them on and place them along your walkway.

With a bit of imagination and Pinterest or YouTube by your side, you can create some fabulous homemade decorations this year without breaking the bank. 

BY JULIE ACHTERMEIER

 

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Preparing Your Home for Fall

As the vibrant colours of summer begin to fade and a gentle chill creeps into the air, it’s time to turn your attention to preparing your home for the cozy embrace of fall. Fall is a season of change, and with a little proactive effort, you can ensure that your home is ready to welcome the autumn months with warmth, comfort, and style.

EXTERIOR TOUCH-UPS
Before the weather takes a turn, take some time to spruce up the exterior of your home. Clean out gutters and downspouts to prevent clogs from fallen leaves. Inspect the roof for any damage that could lead to leaks during autumn rains. Touch up exterior paint, repair cracks in walkways, and ensure that your home’s entryway is inviting with a seasonal wreath or some potted mums.

GARDEN AND LANDSCAPING
As the growing season winds down, tend to your garden and landscaping. Trim back overgrown plants, remove dead vegetation, and plant fall-blooming flowers for a burst of colour. Consider mulching your garden beds to protect them during the colder months. If you have a lawn, aerate and fertilize it to ensure a lush carpet of green next spring.

HEATING SYSTEM MAINTENANCE
Before you turn on the heat for the first time, schedule a professional inspection and maintenance for your heating system. Clean or replace filters, check for any issues, and ensure that your furnace or heating system is in optimal working condition. This not only keeps your home warm but also improves energy efficiency.

COZY INTERIOR DECOR
Embrace the spirit of fall by incorporating cozy interior decor. Swap out lightweight summer fabrics for soft throws and warm, textured pillows. Consider introducing warm colour tones like deep oranges, rich browns, and earthy greens into your home’s decor.

Candles and soft lighting can create an inviting ambiance during the longer evenings.

FIREPLACE AND CHIMNEY MAINTENANCE
If you’re lucky enough to have a fireplace, now is the time to get it ready for use. Schedule a professional chimney sweep to remove creosote buildup and ensure proper ventilation. Test your fireplace to ensure that it’s working safely, and stock up on firewood for those chilly nights when a crackling fire is just what you need.

INSULATION AND WEATHERPROOFING
Inspect your windows and doors for drafts and apply weatherstripping or caulk as needed to keep warm air in and cold air out. Consider adding heavier drapes or curtains to help insulate your home. Inspect your attic insulation and make any necessary updates to keep your home cozy and energy-efficient.

FALL CLEANING
Channel your inner Marie Kondo and tackle a thorough fall cleaning. Clean and store summer gear, declutter spaces, and organize closets. Pay special attention to high-traffic areas, as fall often means more time spent indoors. A clean, organized home provides a calming atmosphere during the bustling fall season.

As the leaves begin to fall and a sense of change permeates the air, preparing your home for fall is a labor of love that sets the stage for a season of comfort and togetherness. By tending to both the exterior and interior of your home, you’re creating a haven where you and your loved ones can relish the beauty of autumn, cocooned in warmth and surrounded by the sights and scents of the season.

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5 Things Not To Do When Selling Your Home

The process of selling a residential property can be time-consuming and emotionally demanding, especially if it is your first sale. While your home’s curb appeal influences a prospective buyer’s potential to propose an offer, it may sometimes feel like an invasion of your property.

Strangers will visit your home and snoop around in search of defects. Others will worsen the experience by offering less money than the property’s market value. However, you can mitigate some of that by avoiding some of the common mistakes other sellers make, such as:

1  Overpricing the Property

It is understandable to want the highest price for your home – besides, you are the one who can best attest to what an excellent home it is. Nonetheless, listing your home with an inflated ticket price may harm your prospects of quickly selling it. With no offers, the home may spend months on the market, which makes other property hunters think something might be wrong. That leaves you with no choice but to eventually lower the price to attract more buyers.

2  Getting Too Emotional

Imagine selling your first home? It evokes a pang of nostalgic memories you made in the house, the financial sacrifices you had to make to secure the down payments, etc. These are plenty of reasons to make one feel emotional about selling a home.

For the best outcome, it would be better if you viewed yourself as an investor instead of a homeowner. The secret is to handle the transaction from a financial perspective. A Real Estate Professional will be able to help you do proper planning and marketing to get top dollar for your home.

3  Skimping on Listing Images

Many property buyers these days prefer viewing photos and virtual tours of homes online and then discussing the home with their agent using video conferencing. Hence, you need to ensure the listing photos play an integral role in marketing your home. If possible, hire a professional real estate photographer. They understand what rooms and fixtures to capture in the photos that buyers look for. They also excel in delivering detailed and clear images of full-rooms or isolated close-ups to bring out the true feel and character of the property.

4  Selling the Home on Your Own

Real Estate Professionals often command about 5% commission of a property’s selling price. Although the amount may seem significant, it is worth the investment, especially if it is your first sale.

Agents have your interests at heart. They will help you set the right market value and level out the emotional aspects of the process by facing potential buyers on your behalf. These professionals will also know what to say during negotiations to ensure you get the most out of the deal. In case anything should go awry during the transaction, agents are experienced in handling seller-buyer misunderstandings.

5  Hiding Property Defects

In the real estate industry, integrity and honesty are critical when selling your property. If you have made up your mind about selling your home, you need to be honest and transparent to the prospective buyers about the home’s fixtures and elements that require upgrades. Keeping such concerns under wraps eventually costs you time and money if the home fails at the inspection stage. You need to disclose any relevant information about the property to the buyer, even if it means the value will be affected. This will help you to build trust, and it is the right way of doing business.

By Jason Woods

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Meet The Realtors: Sarit & Jordan Zalter

How long have you been working in real estate?

Sarit: I have been in the business since 1997 and Jordan has been since 2009. I remember taking road trips with my dad in the early ‘70s as a little girl to purchase properties for development, so our exposure to the business runs deep.  

What is it that makes you so passionate about what you do? 

Jordan: I love that we get to be the guides for one of the most important decisions that our clients will make in their lives. We get the unique opportunity to be invited into people’s homes every day and their level of trust in us combined with the weight of the decisions often foster friendships that last a lifetime. Combine that level of intimacy with the strategic components of marketing a home, negotiating offers, and understanding construction and you have a pretty exciting and all-encompassing career! 

What are the advantages of working with a family (mother/son) team?

Sarit: We have a perfect blend of knowledge and negotiation skills that truly benefit our clients. With over 40 combined years of experience, we are proud of our reputation in the Hamilton area and are completely devoted to our clients. I truly value getting to work with my son almost every day. We know each other’s strengths and weaknesses, and are fortunate that they seem to balance out almost perfectly. As a mother that gives me lots of quality time with my son, and for our clients that gives them an unrivaled level of service.

Is there a particular area you specialize in, either in terms of neighbourhoods, or types of homes, or perhaps the type of clients you like to work with? 

Jordan: We get asked this question all the time! While consumers tend to think that we specialize in high end homes and the Western segment of Hamilton (Dundas, Ancaster, Flamborough, and  West Hamilton) we  truly enjoy working  with clients in all areas of the city. From first time home buyers to seniors and from starter homes to multi-million dollar estate properties, the common thread in our business is  that we like to work with clients that enjoy working with us! 

In such a competitive market, with so many realtors, what do you offer your clients that you think makes a difference? 

Sarit: I truly believe that we offer the complete package to our clients. I am often referred to as a “shark” in negotiations, yet our clients know me as a compassionate shoulder to lean on. I am also someone who studies all new listings and sales on a daily basis to ensure I have up to date information on the market. There’s an old cliche, “It’s not what you know, it’s who you know” – but our experience has taught us that, It’s what you know AND who you know! Our knowledge and experience goes a long way, in combination with our good working relationship with our peers, to ensure the best for our clients. 

zalterrealestate.com

905.525.ZALT

sarit@zalterrealestate.com

jordan@zalterrealestate.com

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The Risks and Rewards of Buying a Rental Property: Hamilton

For the average person, trying to anticipate what’s coming next in the real estate market is like trying to predict the weather in April. And deciding whether to invest in real estate in today’s market can be even more confusing. Our real estate experts share great advice on the risks and rewards of residential rental properties and what to watch for when making the leap to becoming a landlord. 

Types of Rentals

Today’s investors will need to consider what sort of rental unit they want to purchase and how they will make enough money each month to cover their mortgage and expenses. If they’re limited to a 20% down payment, they may need to think outside the box to create more cash flow. 

For example, a $1 million home today will require a $200,000 down payment with a monthly mortgage of approximately $5,100 at 6% interest over a 25-year amortization period. As an investor, consider whether you can create a basement apartment. Or if the home can be converted into a duplex or triplex. Factor in all your renovation costs while making your decision about a property.

Short-term rentals are still popular, depending on your location. In Hamilton, the bylaws state that a short-term rental is only legal in your primary residence.
In other words, you are legally allowed to rent your home for a short period if you are away, or you can rent a room or separate unit like a basement suite. 

“If you’re looking for a vacation property to rent, consider northern locations that are affordable but growing in popularity,” Luke O’Reilly from The O’Reilly Group shares. “Some investors look for land in rural areas and put up a yurt or tiny home where zoning allows.” 

Student housing is attractive as there will always be a need in areas near a university or college. “With student rentals, you can charge per room, so it is more lucrative,” Kevin Girard from Royal LePage State Realty explains. “The downside is it puts more wear and tear on the house, and you may experience higher turnover.”

Risks to Consider

As much as a rental property can be quite lucrative, it does come with risks. Be sure to buy in an area you’re familiar with or spend the time doing research. 

Determine how available you will be for repairs and renter turnover. Short-term rentals require more frequent cleaning and maintenance, so you must decide whether to manage this yourself or hire a property management company. The first option costs time, while the second costs money. 

“Understand the zoning and make sure you are allowed to create a duplex, for example,” says Kevin. “You will need to understand the building code, height restrictions for basement apartments, and what parking is allowed.”

Buying without a long-term strategy can also create risks for the investor. “Investors who bought rental properties during the peak hoping to flip may be taking a hit now,” Luke says. “But if there’s a long-term plan, prices will rise again, and interest rates will come down.”

Rewards to Explore

Housing prices are much lower than a year ago, and interest rates are predicted to drop, so the best time to buy is now. As rates go down, more cash flow becomes available to the investor. 

“The biggest reward is appreciation,” says Kevin. “Real estate doubles about every ten years, so if you put $200-$300 thousand down and wait ten years, you will get a huge return.”

Rental properties provide a steady monthly cash flow and significant income in the long term. Rental income is taxable, but you can deduct rental expenses, mortgage interest, insurance, and maintenance costs. 

The prospect of buying a rental property can seem daunting, so surrounding yourself with the right team is the key to success. Be sure to engage with a realtor and a mortgage broker who understand the rental market and discuss significant purchases with your financial advisor. 

All decisions come with a level of risk, but with risk comes great reward.

By Julie Achtermeier

 

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