Are you in the market for a luxury investment property? Congratulations! Purchasing a luxury property can build equity and set you apart in the market, while renting it out can help cover the carrying costs until you decide to sell or move in yourself. There are some special considerations that come with renting out your luxury property in Canada, however. Let’s take a look.
Luxury properties need stricter tenant vetting. If you really want to find the best tenant possible, you don’t just want a tenant that has the necessary income or net worth; you also want a tenant that embraces the lifestyle and will treat your home as you would. This might mean a stricter process for vetting applicants, even a background check. Ask your real estate agent for advice.
You might have to pay certain taxes if you don’t. In different parts of Canada, there are different fee systems in place. For example, in Vancouver, there was such an increase in the number of luxury homes that were purchased as secondary properties and sat vacant that the city launched an “empty homes tax” if they weren’t occupied. On the flip side, some neighbourhoods or buildings have a ban on short-term rentals, such as those booked through Airbnb. Your best bet is often finding a long-term tenant.
You’ll have to invest either time or money. There’s no way around it—being a landlord does require some work. Whether it’s maintenance, paperwork or finding a tenant in the first place, you put in what you get out. Some landlords prefer to be hands-on, but f you don’t live near the home you’re renting out, handling these tasks might not even be possible! Many luxury brokerages offer property management services and will handle these tasks for you, although they usually charge a percentage of the monthly rent.