TD has released its annual First Time Home Buyers report and if you were thinking about buying a duplex or a place with a basement apartment you’re not alone. One-third (33%) of first time home buyers said they have or plan to buy a home with a rental unit. Of those, 70% said they would use the extra income to help pay down the mortgage faster.
The majority of those surveyed expected to receive between $500 and $1000 per month for their units. This was a national survey, but that is pretty on target with what you can expect from a typical duplex in London too.
Personally, I think this is a fantastic route to go if you’re comfortable with it. However, the report also indicated that only 76% of first time buyers were getting pre-approved for a mortgage (down from 91% the previous year) which worries me that people are only seeing the shiny side of the coin.
Having a rental unit provide extra income can be wonderful, but it is so vitally important to do your homework first! Make sure having tenants is for you.
- Do your research to understand what type of tenants will be renting in your area. Speaking to a realtor who is familiar with your area will help.
- Keep in mind that having a rental unit means being a landlord and owning up to all the responsibilities that come with it. Read through and understand the Residential Tenancies Act to make sure you’re willing to assume the responsibilities and risks involved.
- Get pre-approved for a mortgage. Nothing will leave a sour taste in your mouth more than finding your dream home and not being able to afford it. Getting pre-approved first allows you to set a budget. A budget lets you narrow down the areas of town you can afford and can help you decide where you are willing to make sacrifices.
Happy hunting first time buyers!