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Renting out your home in North Delta

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Are you thinking about buying a property to rent in North Delta? This may be a sound investment; after all, real estate has helped people amass great amounts of wealth, and it’s a more hands-off investment than starting a business. 

However, just like with any other investment — it’s not as simple as it first appears. You need to be well-versed in the many intricacies of being a landlord before you can truly profit from a real estate investment. And if you want to become the new owner of one of many North Delta rental properties — we’ll give you all of the information you need right here!

Becoming a Landlord in North Delta 

There are plenty of advantages to buying a rental property as a long-term investment. Most obviously, it’s a stable source of income. Even after you pay the mortgage and assorted expenses, there will probably still be a tidy profit. Though, while this is a source of passive income; it doesn’t mean that being a landlord is “free money”; there’s still work to put in. 

Apart from the rent, you’ll receive from your tenants, there’s also the matter of price appreciation — as time passes, the value of your property will most likely increase. This depends on a variety of factors, such as the state of the property and the stability of the local market.

The latter shouldn’t worry you, as the real estate market in North Delta is in rude health. The average prices for houses in the area have been moving up sharply over the past year. This is largely due to a spike in demand among home buyers — and though most of them are not looking to rent their newly bought properties, the average price for all homes increases nonetheless. 

In February 2021, the number of sales increased by a stunning 73% compared to the same time last year. And while a lot of this is due to the better COVID-19 situation, it’s still a noticeable upward trend. As a result, a detached single-family home in the area has a benchmark selling price of around $1,2 million, apartments go for about $400,000, and townhouses are priced at about $675,000 on average. 

But even if we disregard the COVID-19 pandemic, the value of homes in North Delta has been steadily rising throughout the past decade; with occasional dips but an overall upwards trend. 

Landlord Expenses

Naturally, there are additional costs that come with being a landlord; besides the obvious expense of buying a property to rent. The chief among these is the annual property tax — but besides that, you need to pay a property transfer tax when you first buy the property; it’s non-recurring, so it’s a one-time fee. 

Apart from that, British Columbia landlords also have to report their rental income on their tax returns; meaning you’ll also be paying income tax for your rental income. Luckily, there are plenty of tax deductions that you may qualify for! 

Tax Deductions

First of all, you can deduct any rental insurance premiums that you’re paying for the rental property. The same is true for any interest on borrowed funds if they’re used for renovations, upgrades, repairs, and construction that improves the property. That being said, you can’t deduct the interest on your mortgage principal. 

Though, some of the other expenses related to your rental property purchase are tax-deductible — like fees related to getting your mortgage, lawyer fees, and closing costs. Plus, you can deduct your property tax for a North Delta property, so that you don’t pay double. 

Furthermore, you may deduct the full amount paid for utility fees on the rental property — such as Internet, cable, water, hydro, and heat. If you decide to employ anyone (like a property manager, or maintenance staff) to help you manage the rental property, you can deduct their salaries. 

Also, once you begin renting out the property and need to pay legal professionals to help you prepare the lease, as well as fees to collection agencies and accountants — you can deduct all of this from your taxes. Landlords that have to travel to collect their rent or oversee repairs and renovations can deduct the travel expenses, like airplane and gas costs.

Unexpected Costs

While most of the costs that we’ve outlined above are fixed taxes — there are some unexpected expenses that you can’t easily prepare for. This is a staple of owning rental properties that you’ll have to get used to. 

From fixtures and plumbing (that are cheaper to replace) to more expensive repairs like faulty wiring — you will need to deal with it. However, if the tenant has caused the specific damage that you’re dealing with, you can ask them to pay for it per your rental agreement. 

There are other things to consider as well — such as the ongoing management of the property. Do you have the time and the willingness to handle all of the repairs and assorted tenant issues yourself; or will you hire someone to help you manage it? If you opt for the latter, that’s another fixed cost to think about. 

But the real question is — how do you avoid having a lot of unexpected costs in the long run? At the end of the day, investing in a well-maintained property is the best way to ensure that, apart from getting a property that needs renovations but will pay off in the long run. 

Where To Buy a Property

Currently, there’s a real estate boom in British Columbia, and more specifically North Delta. In this kind of seller’s market, home buyers are practically clamouring for any listed house; on average, houses don’t stay listed for more than two weeks right now. However, while this is great — it’s not permanent. 

If you want to ensure that you get the most out of renting out your home in North Delta, you need to buy a home in the very best locale. That way, the value of the property won’t depreciate over time — and you’ll be able to get more high-paying tenants! 

Considering this — what makes a good location? This can mean different stuff to different people, but we can still point out some objective factors that homeowners (and renters) want from the location of their property. 

In the case of North Delta, getting a rental property somewhere like Sunshine Hills is a great idea. The area has a decent connection to downtown Vancouver — but more importantly, this high-income area is in a great school district. The local Seaquam Secondary is an IB school, and there are four great elementary schools in the area as well. 

Generally speaking, though — you want to see the number of vacancies and listings in a neighborhood before investing in a rental property there. If you’re seeing too many vacancies and listings, this might signal that a neighborhood is declining. Plus, higher vacancy rates are a death blow to landlord incomes, because they force you to lower rent if you want to attract tenants. 

Also, certain amenities are important. You’re more likely to find great tenants with an additional bathroom or a large yard — and having shopping areas nearby is also a great plus. Generally, everyone appreciates being near parks, transportation links, gyms, restaurants, and similar quality-of-life features. 

What Kind of Property To Buy

When it comes to the specific North Delta rental property you want to buy, there are plenty of different considerations to make. As we’ve mentioned above, the neighborhood where the property is located is going to be one of the prevailing ones. 

The property taxes that you’ll be paying are another financial factor — though, high property taxes aren’t necessarily bad, if you choose an awesome neighborhood that’s likely to attract long-term tenants. 

If this is your first real estate investment, it’s probably smart to start with a single-family home or a condo. With a condominium, you won’t have to think about maintenance as much; though it also means lower rents and a slower rate of value appreciation.

On the other hand, single-family homes are a no-brainer because they lend themselves to long-term renters — couples who are looking to start a family, or existing families with a stable financial base for regular rent payments. 

And the level of rent is important for obvious reasons — it’s the most important part of your return on investment with a rental property. When it comes to North Delta, a one-bedroom apartment will provide you with about $1,600 in rent on average. 

A large six-bedroom house may net you around $4,500 in rent each month, while a 3-bedroom house is often rented for about $3,000. However, an additional bathroom provides a lot of value here, considering that 3-bedroom, 2-bath homes are rented for $3,500. Also, 2-bedroom homes are rented for between $2000 and $2500 per month.

Renovating a BC Box House as a Rental Property 

When it comes to cost-effectiveness, Cone of your best options is buying and renovating a box house. Most of these homes were constructed before 1990 and the design isn’t nearly as popular today, but they can be renovated into the perfect rental property. 

Adding a secondary renter’s suite is one of the best ways to get the most out of a renovated box house; and most of these homes have basements that can support such an addition, allowing you to generate even more income from your rental property. 

That being said, you need to adhere to British Columbia building code requirements if you want to have a legal suite:

  • It cannot exceed 40% of the floor space of the principal residence, or 90 square meters (the lowest of the two applies)
  • You cannot add more than one secondary suite to a home if you’re going to live in it as well
  • The secondary suite needs to have its independent entrance
  • The heating system on the secondary suite must not be dependent on the main living space. 
  • Bedrooms in the suite need to have an opening window 
  • The suite needs to have proper electrical, ventilation, plumbing, and heating systems in place. 
  • The suite must include a shower or bathtub, kitchen sink, and lavatory, as well as a water meter. 
  • There must be carbon monoxide and smoke alarms installed

Apart from the BC building code that you need to comply with — all local municipalities have their municipal bylaws governing secondary suites, depending on their zoning. In the case of Delta, you will need to request a building permit from the Community Planning and Development Department. Apart from the requirements outlined above, the local zoning bylaws provide additional requirements — most notably, all secondary suites in the area must have their own on-site parking space. 

Conclusion

As you can see, North Delta is an extremely prospective area when it comes to rental real estate investments. All you need to do is to choose your property wisely and consult your top North Delta team for additional tips on great rental properties, and info on exclusive sales — don’t hesitate to call us today!

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  • Sukh Brar Real Estate Group

    Sukh Brar Real Estate Group
    (604) 648-7800
    sales@sukhbrar.ca
    Top 1% Realtor according to the FVREB 2014-2019