Page 26 - Real Estate Now Sept-Oct 2021

Different Types of Investment Properties

and What to Consider

Scott McGillvray courtesy REALTOR.ca
hen it comes to investment properties, there’s a lot to take into consideration. Aside from the financial
and tax responsibilities, finding an investment property that makes sense for your situation requires some
Wserious soul-searching.

It’s best to take a look at some of the pros and cons before getting into the market, as each type comes with its own
set. However, there are some pros and cons that apply to every type of investment property. One pro, of course, is
you’ll have a second income—always a plus. The biggest con for any investment property is you’re not guaranteed to
have tenants at all times, which means that second income may not be consistent. As the landlord you’re also on the
hook for any repairs or issues that need to be dealt with.

Let’s walk through some of the other pros and cons of the most common investment properties to see which one
suits you best.

Duplexes
Duplexes are popular choices for investors looking to be close
to their property—really close. They can also be great family
investments, allowing different generations to live under
the same roof but with private dwelling spaces. There are
additional tax deductions available to you as well when you live
on the property! Typically, work done to common spaces such
as your yard, roof, or adjoining wall can be written off at 50% if
the duplex is owner-occupied. Some people also consider the
proximity to your investment to be a pro. If issues arise you can
deal with them in a timely manner, plus you can keep an eye
on how your tenants are treating the space. If you’re not living
in the space and are instead choosing to rent out each portion
of the duplex, the biggest advantage is collecting that additional rent.

On the flip side, duplexes can be more expensive to purchase, which puts you at a bigger risk if you can’t find tenants.
It can also be harder in general to find tenants for duplexes, as more and more people are looking for privacy and
larger spaces. Living attached to your tenants, albeit in a designated space, can also be a bit strange depending on
who they are. If you’re not choosing to live in the duplex, you’ll have double the tenants to find—and double the
repairs to deal with.

Single family homes
Over the last 18 months, single-family homes have been in demand as buying trends have changed. With an increase
in working and schooling from home, the need for space has become paramount. Because of this shift, single-family
homes could potentially be more attractive as investment properties.

Let’s start with the pros! In comparison to a full duplex, single-family homes are typically less expensive (depending
on the home), which could see higher gains in your net income. Plus, the market for single-family homes is hot
right now, meaning if you need or want to sell your property you’ll likely have an easier time doing so. From a rental
perspective, single-family homes tend to attract longer-term tenants, providing a sense of stability to your financial
situation.

In terms of cons, there’s one big one that stands out. Owning a single-family home as an investment property means

26 | REAL ESTATE NOW | denise@BCislandhomes.ca