Buying Rental Properties: Profiting From Winnipeg Real Estate

Rough numbers to help you decide whether rental properties fit your investment plan.

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There are a number of ways to profit in Winnipeg’s ‘slow and steady’ real estate market. One is to buy and flip houses, and another is buying rental properties.  In a slower market, this second method works well for those who are willing to take a longer position in their portfolio.  Not quick money, but steady income and an eventual windfall when you sell 5-10 yrs. down the road.

Buying Rental Properties: The long view

The idea is that initially, the investor is able to collect enough money to cover his expenses. Hopefully with a small profit at the end of each year.  As the value of the home or condo increases, and rental rates increase along with it, the return improves over time.  Then, a number of years down the road, the home should have increased by 15-25% in value. If the owner decides to sell, he will realize a nice profit at that time.

Lets take a look at some ways to calculate expenses of an investment condo, for example

Buying Rental Properties: Profiting From Winnipeg Real EstateAs you can see, a lot depends on those condo fees.  In this example, the property owner may realize a monthly profit of $150, however he should also budget for temporary vacancies, any possible repairs or condo special assessments and other expenses.

The return is approx. 113% on their monthly investment of $1,100.  (not counting the potential sudden expenses just mentioned above)

So how about buying a house and using it as a rental property:

Buying Rental Properties: Profiting From Winnipeg Real Estate

A client of mine owns a similar home and collects $1,500 per month in rent, plus the tenant pays for their own utilities.  Now we are looking at approx. $500 per month profit, or a return of approx. 150% on their $980 expense.

Rental Properties that are not pretty

If you can see past the rougher neighbourhoods, and are willing to settle for a ‘not-so-pretty’ house, your bank account might thank you for it!  Here are some actual numbers for a property coming to market soon:

Buying Rental Properties: Profiting From Winnipeg Real Estate

For the investor, these numbers are very encouraging.  Basically it amounts to 214% return on their low monthly investment.  Low outlay up front, and a great return in monthly rental income.  These lower-priced homes are excellent potential rental properties.

 

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