Before the boom, from 2003 to 2007, it was a great investment to buy a home with a secondary suite to the home. You could buy a property for around $200 -$250,000 and the rent from the 2 units would not only cover the mortgage, but there was a positive cash flow left over to pay down the mortgage faster, create a reserve fund or just simply spend. After the prices shot up in the boom years, that was no longer as viable. 2 things have happened in the last couple of years that have now put this investment vehicle on the forefront. The interest rates remain at an all-time low, and the prices have dropped back to an achievable level. This is true in all 3 of our market places; the Central Okanagan, the North Okanagan and Salmon Arm/Shuswap area. For example, you can buy a good solid home with a suite in East Hill in Vernon for about $350,000. If you put 20% down your mortgage is $280,000. Your monthly payment at 3% is $1325,00. Add taxes and a contingency to bring it to $1600 per month. Rent for a 3 bedroom upstairs and a 2 bedroom basement suite would be about $2200 per month. That means a $600 per month positive cash flow or a 10% annual return on your $70,000 Down payment. Also these numbers are conservative. You can buy houses in East Hill for less than $300,000 and you can get a 2.6% interest rate as well which all adds to your profits. This is a great return on your money.
If you are interested in finding out more, please feel free to give me a call and we can go over your options.