Part 2: Buying a Multi-Unit Property in Halifax NS

Blog Post Image
Buying

Welcome Back! This is part two, where we dive into more factors that you should consider when buying a multi-unit property in Halifax, Nova Scotia. If you missed part one, just click the link here! Ask yourself these questions before purchasing, to save yourself headache down the road. If you happen to not know the answer to one of more of these questions, reach out to us for more information! The more prepared you are upfront, the greater chance you will succeed in your investment endeavours! 

 

 

Are you overestimating your expenses?

This is great advice for any investment. It is always great to overestimate your expenses, versus underestimating them. Where this applies in terms of multi-unit properties is mainly in repairs and vacancies. By over-preparing for repairs and replacements such as new appliances, pest control, plumbing, and electrical issues, and vacancies in case you as the owner need to cover rent costs, you should have no issues when these problems occur. The rental market can go through ebbs and flows similar to the real estate market, so preparing for the slower seasons will guarantee your success. A tip from us: save up an emergency fund of 3-6 months worth of operating expenses that can act as a buffer for unexpected costs!

 

 

Are you starting small?

It’s always best to start small, especially if you are planning to act as the landlord for your new investment property. Managing tenants means being on call at all times, balancing multiple requests, and practicing sound money management. For your best chance at success, consider purchasing a duplex or triplex, before jumping into managing something like 10+ units. Smaller properties are more affordable as well and can be less of a risk to take on before building up your equity. 

 

 

Do you know how to properly screen tenants?

Choosing the right tenants is crucial to the success of your investment property. Good tenants can save you from property damages, chasing rent, added repairs, neighbourhood complaints, and more. There are many ways to screen tenants, but we recommend the following: 

  • Always meet all tenants and any pets that will be occupying the property in person before signing leases.
  • Create an application that allows tenants to state current and/or former employers, references, previous addresses, etc.
  • Call references to ensure the validity of the tenant’s statements
  • Use a system such as Naborly to perform credit checks on potential tenants.

The more work you do up front to ensure you chose great tenants, the less of a headache you will endure down the road.

 

 

Do you know how you are going to finance your investment?

First, in Canada, most 1-4 unit properties are zoned as residential properties, however, 5+ units are typically zoned as commercial properties. Commercial mortgages are typically more difficult to qualify for, and interest rates may be slightly higher. Even if you purchase an investment property with 1-4 units, financing your investment may look a little bit different than if you were to purchase a single-family home. As we stated above, the minimum downpayment may vary, as well as other terms in your mortgage contract. Always speak with your mortgage professional before deciding to purchase a new property so that you are set up for success. If you do not have a mortgage broker, we recommend working with Shawna Snair at Premiere Mortgage Centre!

 

 

Do you understand the tax implications of owing investment properties?

Lastly, since your investment property will likely be bringing in some income, certain tax implications may apply. In Canada, income from rental properties is taxable. There are, however, ways to lower your taxes owed, like for example, deducting operating expenses. Taxing of rental property income can differ based on if you own the property personally, in a partnership, or in a trust/cooperation. If you are unfamiliar with tax law in Nova Scotia or bookkeeping in general, we highly recommend hiring a tax accountant so that you avoid mistakes and complications. The last thing you want is to be hit with a large income tax bill that you are not prepared for. A great article to learn more about this can be found here:

 


Multiunit properties can be great investments for their stability in contrast to the stock market, for those who enjoy being active in their investments, for those who may want to double their investment as their home, and for many other reasons as well. With the right information, plan, and awareness, almost anyone can succeed at investing in real estate. Contact us today for more information if you are curious about investing in Halifax!