Surrey BC Real Estate
Surrey is quickly becoming a booming metropolitan area. While real estate prices are currently considered affordable compared to other regions in the Greater Vancouver Area, price tags and Investment Property are expected to rise. With more economic growth expected to happen across Surrey in the next few years, now could be an excellent time to invest in a Investment Property. You can earn money by renting the property, and you’ll benefit as the home’s value goes up giving you more money to open bank accounts.
Surrey is an up and coming city for families – this makes it an excellent place to invest in rental property. Homes in Surrey are selling quick, on average a home is on the market for only 17 days. The city of Surrey is massive, and there are plenty of detached home, condos, and town homes available for sale. So whatever your budget for an investment property, there should be a listing that meets your needs.
Getting a Mortgage in Surrey
Once you’ve found a property to invest in, you’ll need to secure financing in order to pay for it. It is always highly recommended to work with a Surrey Mortgage Broker.
Securing financing for a rental property can be tricky, which is one of the reasons we recommend using a mortgage broker instead of walking into your local bank branch. Banks are limited to offering only their own products. So even if they approve you, you may not be getting the best deal available.
A Surrey mortgage broker works with multiple lenders and banks. When you work with them, they compare the mortgage products from all their connections, and present you with only the best choices. This help ensure that you’re getting the best product, and the best rate. Additionally, working with a mortgage broker is free. There really is no reason not to work with a mortgage broker in Surrey for securing an investment property.
Interest Rates in Surrey
Mortgage rates for investment properties in Surrey that are non-owner occupied, are often just slightly higher than the interest rate you would receive for your primary residence. Of course that is assuming you already meet all the lender’s requirements, have acceptable credit and reasonable down payment.
It is important to note than in order to get a mortgage for an investment property in Surrey, you’ll need to be able to pass what is known as the stress test. The stress test is being able to qualify for the Bank of Canada’s 5 year benchmark rate, or your proposed contract rate plus 2% – whichever is higher. To put in simple terms, if at the time of your mortgage the lender is offering you a rate of 2.5% and the benchmark rate is currently at 5.25%, you’re going to need to be able to prove to the lender that you would be financially capable of paying your mortgage down if the rate was 5.25% (Although you will only be required to pay 2.5%)
Pros and Cons of Rental Property in Surrey
Investing in rental property is a big step, and it is important to weight the pros and cons before making such a big decision. Below are some of the top pros and cons of purchasing rental property in Surrey BC.
Steady Income – Of course, the main reason people invest in rental property is for the monthly paycheck. Unlike risky investments, a good and stable tenant will pay you on time every month so you can count on the steady income.
Tenants Pay your Mortgage – While you are the one who has applied for the mortgage, with tenants in the home, they are actually the ones who end up paying down the mortgage via their rent. Eventually once the mortgage ends, you’ll completely own a huge asset that someone else paid the loan for!
Protection Against Inflation – Inflation, the rising of prices due to money losing value is inevitable. As the cost of food, and gas go up with inflation so does your home value and the amount you charge for rent. But your fixed rate mortgage payments will stay exactly the same, essentially “protecting” you from inflation.
Tenant Risk – Being a landlord is a tough job. Whenever anything goes wrong, you are the one the tenant calls. Whether it’s 4pm or 4am, the tenant’s problem is your problem. While you can outsource management tasks to a third party company, they are not cheap.
Possible Crime in Surrey – While crime rates have gone down in Surrey recently, there are still neighborhoods that are a lot rougher around the edges than others. Before diving into an investment property, make sure to do some investigating on the neighborhoods it’s located in. Surrey is a huge city made up of six very different town centres. The safety of each centre can greatly vary.
Non-Liquid Investment – While real estate can provide a steady income when it runs smooth, it is not always easy to get rid of if liquidation is required. Selling a home often takes months and months, which is not ideal if you are in a pinch and need cash right away. On the other hand something like stocks (while possibly more risky) can be sold for cash almost immediately at any given time.