January 18, 2022
When it comes to owning real estate, homebuyers have to make a decision in terms of using the property as a residence or probably as a form of investment.
The potential rate gains of properties such as a house or a condominium provide an attractive prospect for those who look forward to some returns on their investment.
In terms of size, condominiums would be the most popular among residential properties in urban settings, as well as single-family homes that have direct access to a street. These types of properties become good rental residences for families going on vacation usually for days or weeks. Instead of getting hotels and expensive suites to fit the whole family, condominiums and single-family homes are the best options with regard to their size and location. This residential real estate provides a lucrative amount of benefits with only a minimal investment than commercial properties.
Low cost of entry, high benefits
First-time homebuyers become instant investors once they purchase their homes. And the reason is pretty obvious. It cost much less to invest in residential property than in commercial real estate. Since commercial real estate is priced much higher than residential real estate, buyers end up putting larger down payments. As a result, it is better for the average homebuyer to save up for a residential property, house, townhouse or condominium, even if it requires a 5-20% down payment.
This is the reason why it is easier for seasoned homebuyers to buy as much property with not that much financial risk.
Potential for tenants
Homebuyers who purchase residential real estate are promised a good number of potential tenants – working professionals, students, immigrants, ageing couples, and small-sized families who decide to downsize can rent out a portion or even the whole property rather than buy a home for themselves.
This is notably true in Canada. With the current skyrocketing prices in the Canadian housing market, more and more people prefer to remain tenants a little longer than purchasing a home themselves. This in turn benefits investors who turn to landlords because of an influx of tenants and they can have a selection of people they would want to rent the property to.
Buy a home, become a landlord
A homebuyer purchasing a rental property consequently becomes a landlord. With being a landlord, responsibilities come with this role which include finding your own good tenants, while managing and maintaining your property that will be rented out.
Signing the lease does not mark the end of these responsibilities, it can take many hours a week should there be a number of properties and tenants you would have. Some would even consider making this a full-time job, while some would prefer to handle only their own home as a rental property which makes it a little easier to manage.
There’s always the option to hire a property management companyshould you, the homebuyer, be too busy to handle landlord responsibilities. The role of a property management company would include tasks such as collecting rent, finding tenants or fixing broken utilities. That’s three fewer things for you to worry about owning a rental property.
On the upside, hiring a property manager may be a great option for those who are simply looking to make a profit off of their real estate investment, without becoming a full-time landlord. It becomes less stressful and frees you of time and commitment. As an investor, you may consider that there are certain fees associated with hiring a property manager and it could reduce the amount of profit you make.
What’s in store for First-time homebuyers in Saskatchewan
- First-Time Home Buyers Tax Credit
The First-Time Home Buyers can claim a tax credit of up to $750 on their tax return of the year they purchased their home. This is a pretty straightforward program for people who’ve bought their first home. This is also available to Canadian homebuyers with a disability, even if it isn’t their first home. Find out if this applies to you, speak to our mortgage specialist and find out more.
- RRSP Home Buyers’ Plan
A new program, the RRSP Home Buyers’ Plan allows a homebuyer to borrow up to $35,000 from their RRSP (registered retirement savings plan) in order to fund the downpayment of their first home. For couples, the maximum amount they can borrow is $70,000.
The catch is, that this amount should be paid back over the next 15 years. Failure to pay this back would result in getting charged income tax on the unpaid amount (the RRSP deposits should already have been tax-deferred).
- GST/HST New Housing Rebate
A homebuyer who has purchased a new, off-the-plan, or substantially renovated property, will likely need to pay GST or HST on it, on top of their other closing costs. The GST/HST New Housing Rebate aims to make this less of a burden for first-time homebuyers.
The GST/HST New Housing Rebate is equal to 36% of the GST paid on the purchase. the full rebate will be received if the purchased home has a market value of $350,000 or less. For homes priced between $350,000 and $450,000, the rebate received will only be a partial amount.
Thinking Forward
There are pros and cons to a decision such as purchasing a home, but we at BelleMaison can provide you more detail to help you along the way, call us to book an appointment and we’ll get you to make the most of your investment without the hassle.
Author Trevor Percy
