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Is Now A Good Time To Invest in Rental Properties?

Rental Property Mortgage Rates

Is now a good time to invest in a rental property? Interest rates – and rental property mortgage rates – have been rising, so many newbie investors are wondering if they should hold off on jumping into the rental property market. With good reason – investing in a rental property can be a difficult decision, especially if you are a first-time investor.

However, many economists expect interest rates (and corresponding rental property mortgage rates) in Canada will cool down and stabilize in 2024 – which could spell good news for both new home buyers and rental property investors.

And while we can’t generalize and say that all rental investments are good investments, there are a few factors that could make your rental property outlook in the near future a good one:

1. Fewer Housing Starts

Housing starts – or new home construction – have been volatile during the past few years, due to the impacts of COVID-19, supply chain issues, labor shortages, market uncertainty, and rising interest rates. Lower housing starts means fewer new homes to purchase. Even if housing starts increase, in 2024, housing demand is expected to outstrip supply for some time. This can create a higher demand for rental properties, and an increase overall rental rates and rental income.

2. Turnaround in Lower Housing Prices

Housing prices have been predictably falling as interest rates have risen. However, the trend in lower housing prices may soon turn around. According to the Canada Mortgage and Housing Corporation (CMCH) Spring 2023 Housing Market Outlook, housing prices are expected to stabilize, and even begin to rise in 2024 and 2025.

While rental property mortgage rates are higher than in the past, housing prices are currently lower than they have been in the last few years. This could mean that now is a good time to buy a rental property before prices begin to rise again.

3. Continued Rise in Rental Rates

The same report from the CMCH notes a “strong upward pressure” on rents. According to the November 2023 National Rent Report from Rentals.ca, rental rate growth year-to-date was 9.9% across Canada in October 2023, with double-digit hikes in communities like Oakville, Richmond Hill, Mississauga, and Markham. Higher rental rates help in times of higher rental property mortgage rates.

Before You Buy – Do Your Research and Make a Plan

Before investing in a rental property, do your research, and be sure you are making a solid financial decision. You may have equity in your current home or rental portfolio to help with your rental property purchase. Be sure to consider:

● How much do you have for a down payment? You should have at least a 20% downpayment on a rental property – the more you can put down, the better cash flow the property will produce.

● Will you be living in the unit and renting part of it? If rental property is also your residence, renting can be a good way to help cover the mortgage on your dream property.

● Do you have the time and resources to be a landlord? Being a landlord takes a lot of work. You need to be aware of the legal requirements of being a landlord, and be prepared to deal with tenant issues.

Contact HW Advantage When You are Looking for Great Rental Property Mortgage Rates

At HW Advantage, one of our key advantages is providing you with options. When you contact a Big Bank, you might be able to get their best rate. When you contact HW Advantage, you’ll get access to the best rates from over 35 qualified lenders. Best of all, we work for you – our business grows on the money we save for our customers. Ready to learn more, or want to see what HW Advantage can do for you? Send us an email, call us at 905-541-6961, or apply for a mortgage through HW Advantage online.


● Reuters: Bank of Canada likely done raising rates, to cut by mid-2024 say economists: Reuters poll

● Canada Mortgage and Housing Corporation: Spring 3032 Housing Market Outlook

● Rentals.ca: November 2023 National Rent Report