Mortgage Rates at an All Time Low

We’ve talked on My University Money before on how to make owning your own house might work for you as you proceed through post-secondary education.  Before I get into why now might be a particularly good time for students and their families to take the leap into ownership, I should probably reiterate that this strategy is definitely not for everyone.  In fact, it’s probably not for the vast majority of young students out there.  That being said, I think it’s a legitimate strategy that I’ve seen many students use to their advantage over the years.  In fact, I can say that I’m a little jealous of the wealth they were able to generate early in their lives, despite the fact that many of those friends didn’t even realize all the positive spin-offs their decisions would have at the time.  I thoroughly enjoyed my freshmen and sophomore campaigns of no-responsibility-bliss though, so maybe being a landlord wouldn’t have suited me so well at the time (and likely still wouldn’t today).

Once you do a little preliminary research into what taking out a mortgage and owning a home is all about, it’s then time to scout out your area and see what real estate opportunities might exist.  Most neighbourhoods anywhere near a campus in Canada will have extremely low rental vacancy rates.  That’s great news if you’re buying a property with rental income in mind because there will always be demand for your property, and the market will be easy to define, and relatively impervious to traditional swings in the housing market.  The flip side of that fact is that houses generally cost a little more close to campus than they would further away from it (all other things being equal).  This premium is due to the same reasons why you can charge more rent: supply and demand.

Your next decision revolves around what kind of renter you want to be.  If you’re just going to rent to students, you can probably get away with buying a large house with 4 or 5 rooms and just charging rent to live in those circumstances (most students don’t mind sharing a kitchen or a bathroom).  If you want to really creative however, and not limit your tenant selection, you might want to scout properties known as “multi-family units”.  Basically this can mean anything from duplexes to buildings with several separated living areas.  These units obviously cost a lot more, but more can also be charged to tenants who want one as well.  Another option is a “regular” house with a basement suite.  I know several students who found great, affordable deals, renting basement suites, and both they and their landlord were very happy with the arrangement.  It all depends on what sort of investment you’re looking to make, and what level of responsibility you want to take on.

Once you have looked at all of these variables, and decided this is something that you might be interested in, then (and only then) I would say that the next year or two might be a great opportunity to pursue that sort of investment.  The key will be to try and hit the sweet spot between a deflating housing market (although in some parts of the country much more so than in others) and to get in under the bar before interest rates begin to shoot back up again.  I don’t think Canada’s market is going to tank as badly as we’ve seen in the USA, but it might be to your benefit to keep your eye on how long certain houses begin to stay on the market, especially those around your campus, in order to see any patterns you might be able to take advantage of.  In many places such as the Newcastle Permanent Home Loan section you can still get ten-year mortgages and all-time lows.  The ability to live for free and get others to make your mortgage payment might have never looked brighter!

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