One of the best ways to invest in Edmonton real estate is by purchasing a property and renting it out. Buying a property and utilizing it as a rental will see you earning cash flow and building equity – the secret sauce! Seeing a return on your investment is the whole idea. Keep in mind that owning a property, for the sake of renting it out, will require you to have some financial cushion. Let’s explore the unique real estate investment strategy that renting out a property in Edmonton can offer you.
Rental Property Investment
If you have the tolerance to interview, help, and oversee tenants, owning a rental property is a great investment opportunity. Typically, you charge enough rent to cover your expenses initially, which means things like taxes, maintenance, utilities, etc. Because the Edmonton market is constantly evolving, your rental property will be susceptible to ups and downs as well. Owning a rental means you have to be aware of the movements in the market and shifts in the economy. You want to charge tenants the right amount, ensuring that you will still see a profit from your property. The intent is always to have cash flow coming from your rental, more on that further down this article.
Keep in mind…
Another thing to keep in mind is that you will take on the mortgage and expense costs in-between tenants. Occasionally, it can take time to find the right tenant to take over. You’ll spend time interviewing applicants, making reference calls, and confirming they’re the right fit to live in your home. It’s ideal to find a long-term renter you trust with the property, but that isn’t always the case. Either way, the costs incurred during a tenant transition will fall on you. If you can afford to take that on, this is a great way to invest.
Another perk for having a rental property is the expenses related to the rental can be deducted from the rental income to decrease your tax liability. For example, the cost of replacing appliances or routine maintenance can be deducted from your total rental income from the year so that you pay less tax on the income. The belief that your mortgage payments are deductible as well is, unfortunately, not the case. It is only the interest you spend on the tax-deductible mortgage. It’s always great to check with an accountant to ensure you take advantage of tax deductions and credits.
In the end
Eventually, your mortgage gets paid off, thanks to your renters, and then most of what you make from tenants is cold, hard profit. Owning rental properties is advantageous for real estate investors because of the substantial return potential. By building wealth while generating income, your investment property becomes equitable on its own. Talk about a win-win.
Real estate is popular amongst investors for a good reason. There is a long-term appreciation of the housing market. One of the benefits of investing in real estate is generating cash flow. Your cash flow increases after mortgage payments and expenses are made. As you pay down a mortgage, you build your equity. When done right, it’s a great way to earn a profit. Suppose you’re in the Edmonton real estate market and leaning toward investing in purchasing a rental property. In that case, you can rest assured that you may see a valuable profit when done correctly and with patience.
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If you are looking for some insight into which neighbourhoods in Edmonton are worth your investment, feel free to contact us. We’d love to help your purchase your next investment property!