Looking to buy a rental property? If so, you’ll typically have three types of property to choose from:
- Single-unit residential property
- Multi-unit residential property
- Commercial real estate
Single-Unit Residential Property
Single-unit residential properties are especially attractive to first-time rental property buyers because they’re often lower priced and lower maintenance than the other properties.
Types of single-unit properties:
- Constructed on a single lot, no shared walls
- Typically more square footage and privacy than condos/townhouses
- Often have a front and back yard
- Owner responsible for all maintenance costs
- Tend to attract longer-term, financially stable renters
- Typically higher resale value than condos/townhouses
- Single units within a larger building or community, often share one or two walls with other units
- May include gym, pool, club room or other amenities that you might not have in a single- family home
- Usually have a condo/homeowners’ association that requires monthly or annual dues
- Lower maintenance costs as the association typically manages the outside of the property while owners are responsible for inside repairs
- Tend to be more affordable but increase in value more slowly than single-family homes
- Hybrid of a condo and a single-family home, many have multiple-floor layouts
- Typically one or two shared walls with another unit, many include a yard or deck
- Generally larger than a condo, smaller than a single-family home
- More affordable but less private than a single-family home
- Some have homeowners’ associations or joint maintenance agreements with adjoining owners to share maintenance costs
Multi-Unit Residential Property
A multi-unit residential property (2-6 units) is typically purchased as investment property and has one owner for the entire building. Property is usually higher priced than a single-unit property.
- Owner may live in one unit and rent out the other units or live elsewhere and rent out all the units
- Typically have higher maintenance costs
- Tend to have the best potential to generate positive cash flow
Commercial Real Estate
Commercial property is typically purchased by more experienced investors who may or may not already own residential property and are possibly looking to diversify their investments.
- Owner could potentially live on top floor and rent office or retail space on ground floor
- Zoning for commercial use allows owner to have a mix of residential and commercial tenants (retail, office, warehouse, industrial, cultural, institutional, etc.)
- Greater income potential than residential properties, greater risk
- Requires a commercial mortgage
You can benefit from the services of an RBC Account Manager who can help structure your banking needs to maximize potential return.
Consult a qualified real estate agent and investor mortgage specialist for help finding and financing all types of rental properties.