Despite the continued rise in real estate prices in Vaughan, it’s still possible to make money in the market, especially with rental properties. The city of Vaughan offers numerous employment opportunities and is a popular destination for people new to Ontario. The area attracts businesses, employees and their families due to its strong economic base, and the demand for housing for the rising population keeps prices on the rise.
On average, those who rent out their properties in Vaughan will see a five-year rent increase of approximately 13 percent, while the five-year annual ROI (return on investment) is pegged at about six per cent. The demand for housing in the area is getting stronger with each passing year while the vacancy rate is still relatively low. In addition, with prices higher in Toronto and vacancies lower, more and more people are looking to move out of the city but remain in the Greater Toronto Area.
If you already own a rental property you’ve probably been happy with the results so far. However, it may be a bit more challenging if you haven’t entered the market yet. If you’d like to know how to make some money on a rental property in Vaughan we have listed a few tips to help you get started.
Higher down payment
When purchasing an investment property, a 20 percent down payment is the minimum required, but increasing your down payment can have short term benefits. If, for example, you opt to make a 25 percent down payment, it’s possible to recover that extra five per cent in equity gains during the first year. This is because the mortgage payments will be lower with a bigger down payment and your margins will be reduced.
In the past, pre-construction condos and homes were considered the best way to earn money, but they often cost more than resale condos these days. To get the most out of your investment, seek out condominiums which offer a good deal per square foot. These may be easier to rent out and the income can be used immediately to help pay off the mortgage.
If your neighbourhood is gaining in popularity you’ll have an easier time renting your property. You may find a rental unit in a less desirable area of the city for a lower price because it’s an underdeveloped area at the moment. Pay attention to any upcoming developments that can impact the neighbourhood’s property market in a positive way.
An unoccupied property offers the opportunity for a quick financial return on your investment property. If the home already has tenants in it you’ll need to honor the current conditions and lease. If the unit isn’t occupied you may be able to receive a more competitive price when renting it.
This means buying a pre-construction condo and selling it before taking possession. It gives you purchasing leverage since the building’s common areas and amenities aren’t finished completely and newly-constructed condos don’t have to abide by rent control rules when being rented out for the first time.
The best way to make money on a Vaughan rental property is to focus on the long-term rather than looking for immediate gains. In general, the longer you own the investment property, the more equity you will build. House and condo prices typically rise each year and when you do eventually sell the property it will be worth considerably more than what you paid for it.
A multi-residential property will cost more to buy but they typically make for a superb long-term investment. Rental properties on busier streets are usually valued below those located on side streets, but when it comes to multi-residential properties it’s recommended to purchase a unit on a main street if it costs less than a side street property.
Ultimately, if you’re looking to make money in a rental property in Vaughan, consider working with a local real estate agent who understands the ins and outs and ups and downs of the market. For more information and assistance please feel free to contact us at your convenience.