A recent report retrieved by Lightstone, providers of property data analytics, suggests that most (57% to be exact) buyers of second properties, purchase these properties in the same province as their first property.
A very popular trait that developed over the years, was for strong financial individuals to purchase their second property at some holiday destination for private use. Most of the time the purchaser then held two properties in different provinces.
One can only speculate as to why this trait is starting to change, but one very good reason for this could be financial. Not only are holiday homes becoming more and more of a luxury as financial constraints rise due to the Covid pandemic, but is the renting of the property also becoming a more attractive investment option than perhaps a conservative cash investment.
The lower interest rate has not helped those with a healthy cash flow which perhaps has moved these individuals to rather invest their money in a property that can still earn a market-related rent, instead of earning poor interest or growth on their cash investment.
Also, to own your second property as an investment in the province that you live in, also enables the owner quicker and easier access to the same, especially if inspections or maintenance needs to be done on the property and requires overseeing.
At first glance, it seems to be the way to go for the individual with surplus cash flow, but it is important to take note of other obligations when it comes to owning a second property as an investment. If you consider buying a second property as an investment, it is important to be aware of additional expenses such as rates and taxes, levies, maintenance, and insurance.
To rent out property also carries the risk of late or even nonpayment by a tenant, especially in these uncertain financial times. Property is however a good investment option with lower risk than other types of investment. Ensure that you conduct proper due diligence and inspection on the property before you buy the same, however. This will include ensuring that all the relevant building plans, certificates, and financials are in place, as to prevent further headaches along the line.
When you decide to rent the property out, ensure that you have a proper lease agreement in place and a vetting process is conducted before the agreement is concluded with a potential tenant.