Purchasing A Revenue Property in Victoria BC
Greater Victoria has an outstanding inventory of revenue buildings with two or more suites, ranging from smaller duplexes and character conversions to purpose built residential flat top apartments. The large assortment of revenue properties allows virtually any investor to find a property that will meet their future goals and objectives. Well run and managed revenue properties often see the following significant benefits:
The steady income stream produced by revenue properties is virtually unlike any other business in how consistent the income is produced. When selected and setup correctly, a property will often cover all expenses (mortgage, insurance, taxes, etc.) and can even produce some degree of positive monthly cash flow.
The consumer price index (inflation index) in Canada has consistently averaged 2% per year for more than the past 20 years. During that time, Victoria has seen very stable and steady property price growth with property values slightly surpassing inflation rates. Therefore, over the longer term, it is safe to assume some degree of capital appreciation within desirable urban areas such as Victoria.
Revenue properties can be purchased with borrowed funds, allowing for the investor to put down only a percentage of the total value. Essentially, the investor benefits by controlling the whole property and the equity it holds while only paying a fraction of its total cost. Also, the property you purchase secures the debt, rather than your other assets. Investment properties can be purchased at 80% LVR (loan to valuation ratio), or up to 90% LVR with mortgage insurance.
With typically steady income and property values, revenue properties are generally considered low-risk, which makes them popular with the majority of investors. Housing in Victoria and other metropolitan areas is constantly in demand, with the higher purchase prices being offset by substantial rental income.
Numerous expenses pertaining to revenue properties can be deducted from your personal or corporate taxable income. All mortgage interest can be deducted from income when calculating yearly tax returns. Therefore, upon capital appreciation, principal pay down or both, investors can refinance their mortgage, pulling tax-free capital out of their investment properties rather than being faced with potential capital gains tax upon a sale.
With the numerous complexities of revenue properties, it’s critical to consult with a professional who has firsthand experience buying, selling and managing such properties. Get the correct information before you make your next major revenue property decision. Contact Matt directly at email@example.com or 250-704-9949.