Investing in a laneway suite or garden suite in Toronto for rental purposes can generate very attractive returns. In general, these returns come from four separate buckets.
The Four buckets of Laneway Suite And Garden Suite returns:
- Cash Flow: One way to make money with your laneway suite or garden suite in Toronto through cash flow is by purchasing a rental property and renting it out to tenants. The rental income generated can be used to cover the operating expenses and mortgage payments, and any extra cash in your pocket would be your cash flow.
- Equity Gain: Another way to make money with real estate is through equity gain. This can be achieved by purchasing a property with a smaller down payment and using the rental income to pay down the mortgage. As the mortgage is paid down, the equity in the property increases, providing a return on the investment.
- Appreciation: Real estate can also appreciate in value over time. This can be due to market conditions, plus public and private developments that may speed up the growth of an area or property type.
- Value-add Gain: Value-add gain can be made by purchasing undervalued properties and improving them through renovations, or by buying a property that has a lot of potential and then adding value to it by developing the land, adding to the property or improving the property to attract higher rent or resale value.
Other factors that can improve your Laneway Suite & Garden Suite returns
On top of these, investing in a laneway suite or garden suite can provide tax benefits, such as capital gains tax exemptions, tax deferrals, and deductions for mortgage interest.
Financing real estate investments is also one of the best uses of leverage, or making use of borrowed money to make more money. It’s important to understand, however, that this can increase the potential returns on an investment, but it also increases the risk.
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Investing in a laneway suite or garden suite is a long-term strategy and can be affected by various market conditions and factors. It is essential to understand the numbers and your options before you decide to invest in order to maximize investment returns and growth potential.
If you’re interested in exploring whether a laneway suite or garden suite build in Toronto is right for you, we’re happy to help you navigate these options and help you figure out what’s best for you.
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