TORONTO, ONTARIO — (Marketwire) — 10/09/12 — Post-secondary students living away from home in off-campus housing this year may have a new set of landlords.
A poll released by BMO Bank of Montreal shows that while nearly one-in-ten Canadians (7 per cent) have purchased property near a college or university because they intend to rent it to students or have their children there during their studies, two-thirds (67 per cent) consider buying this type of property to be a good investment.
This sentiment is likely due to the opportunity to capitalize on a larger pool of student tenants – post-secondary enrolment is up 3 per cent annually over the last decade – a strong housing market, and a potential way to offset expenses for anyone who has children attending college or university.
“The purchase of a student house, or real estate with the intent to rent to students, comes with a unique set of circumstances that need to be carefully considered well in advance,” said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. “It-s essential to understand the landlord and tenant laws and the trends happening in that marketplace; this includes the vacancy rates of student properties, which have obvious seasonal influences.”
Ms. Parsons added that a careful budget assessment with the help of a mortgage advisor is also needed; as potential buyers need to be financially prepared for a number of potential challenges, including ongoing repairs and the ability to carry the cost in the event of a prolonged vacancy.
“It-s important to understand fully the tax implications of owning a student rental property,” said John Waters, Vice President & Head of Tax and Estate Planning at BMO Nesbitt Burns. “Some advantages include earning enough rental income from student tenants to defray the housing costs, a possible gain on the eventual sale of the property in an appreciating market and, if your child also lives in the property, the savings on your child-s rental costs during his or her studies.”
Mr. Waters added that those considering purchasing student housing for a child or third-party tenants should consider the tax implications involved with this type of investment, including:
The survey was completed on-line from September 4, 2012 to September 6, 2012 using Leger Marketing-s online panel, LegerWeb, with a sample of 1505 Canadians. A probability sample of the same size would yield a margin of error of +/-2.5 per cent, 19 times out of 20.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
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