Renting out an investment property or space in a primary residence can be a headache but also has the potential for high returns according to a new CIBC poll.
It found that Canadian homeowners with a separate rental property can earn an average $2,198 per month, 50% more than their monthly costs; and those renting out space in their main homes can see yields as high as 70%.
More than one in four Canadian homeowners are already landlords (15%) or plan to earn (11%) rental income by letting out space in their primary residence or from a separate rental property.
Almost two-thirds of current landlords own one or more investment properties used exclusively for rental income with $2,189 the average amount they earn in income each month against average expenses of $1,461.
"High housing costs and the growing appetite for additional revenue streams make renting out space a popular choice, especially among younger Canadians," says Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC Financial Planning and Advice.
But he added that owners should check the tax implications of renting out property.
"While most homeowners believe the tax benefits alone make an income property a worthwhile investment, it's critical to understand how it fits into your overall financial plan and be mindful of all of the tax implications of going this route so you can make the most of the venture."
Most homeowners see the benefit of being a landlord
The poll found that 72% of all homeowners believe investing in real estate is an excellent way to earn supplemental income and 37% say they'd opt for a home with a source of rental income if buying a home today.
Canadians aged 18-34 are more apt to be landlords than any other age group. Almost half of millennial homeowners are already landlords (30%) or plan to be (17%), compared to only 29% of homeowners aged 35-54 and 12% of those aged 55+.
"Younger Canadians are more open to sharing their space because they see it as financially advantageous," says Scott McGillivray renowned real estate investor, contractor and television personality. "There's definitely a shift in attitudes and a growing interest in income properties, in part driven by a desire to offset high housing costs, but also because it can be a smart way to create extra income and build wealth."
Overall, more than half of landlords say it’s “worth the headache.”
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