Turn Home Equity Into Rental Income

Using the home equity in your home to purchase an investment property is a great idea.  Why?  Great question!  Investment properties are ideal for creating positive cash flow and for adding diversity to your investment portfolio.  Having an investment property provides the homeowner with options such as:

•     opportunity to sell the property in the future for profit

•     a child or parent can move into the home at a future date

•     generate cash flow to be invested or used to supplement income

Let’s take a closer look at how to turn home equity into rental income.

How do I accumulate home equity?

Home equity accumulates as a mortgage is paid down.  As the owing amount on a mortgage decreases, and the value of a home increases, the bank will lend the mortgage owner a percentage of the difference.  That value being lent against the property is referred to as home equity.

How do I access your home equity?

To access the home equity, your Mortgage Broker will set up a line of credit attached to the mortgage for the eligible amount. Once set up, access the funds as you would a line of credit.

Do the funds have to be allocated in a specific way?

The funds can be used to purchase an investment property, purchase another asset or pay down debt at a lower interest rate.  Regular monthly payments will have to be made as with any credit card or line of credit.

Does an investment property provide tax benefits?

Interest on your investment property is considered an expense, therefore, it can be written off against income generated by the property.  Additional write off items include repairs, maintenance and upkeep.  Having an investment property provides benefits now as well as opportunities in the future. It is a win-win!

If you are interested in an investment property I can help you determine the areas in the GTA that offer growth potential.  Let’s talk! Contact me today to find out if this is the right move for your family - I look forward to connecting soon.