Making Money with a Townhouse

Here’s another one for you.

Buy a townhouse within walking distance to a major public transportation route. 97, 95, 96, O-train, and if you’re feeling confident in the Lightrail project – along it’s proposed path. Walking distance means a distance that you wouldn’t mind walking in bad weather.

Ideally the property is no more than a few years old so you can hold it for a solid 10 years without having to replace or repair anything.

Advertise the property for rent as a 4 bed townhouse perfect for mature students (3 beds upstairs and a lower level as a bedroom). The going rate of a student bedroom for something like this is about $550 a room, so you can try to push for 600 for the basement and master, and 500 for the other smaller rooms – $2200/month and advertised as such (no room by room leases – just one big lease). You should be able to make some great cash month over month. Now more money also means more risk – as I’m assuming you first thought when you read the word “student” – so do a thorough check on them and use your gut instincts. Get their parents all to co-sign as well. I also tell my student tenants that I’ll gladly give them references once they leave and do my best to help them get great rents on their next place. That usually keeps them wanting to be in my good graces. Finding and keeping good tenants is a topic for another blog.

Now what’s great about this strategy is that if you do this right, not only will you be able to make some fantastic cash month over month, but in the event you need to sell this asset at the 10 year mark or sooner – according to a recent CMHC study, townhouses are set to appreciate a little more than all other property types due to the amount of further aging baby boomers and influx of immigrants that want a home but not too much to maintain for their own reasons.

A nice cash flowing asset and a good looking exit strategy with a serious chunk of equity at the end.

Now don’t get ahead of yourself and go running out there thinking this will all work out without some serious diligence and a little risk taking. Consult your trusted professional salesperson.

If you would like some of the finer details of how this could work and a personal step by step walk through, complete with examples of what could work – send me an email at mevans@evanselattar.com