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Many Canadians dream of owning a second property or several properties as an investment. Renting spaces out as commercial or residential areas can generate a substantial income over time. Among the many options, individuals can invest in second homes, townhouses, condos, duplexes, rooming houses or multi-unit residential buildings.

There are many things to consider when buying income-producing properties, so it’s important to do your homework. The following tips are provided by Patrick Morris, the leader of the Morris Home Team and a Broker with Royal LePage Performance Realty:

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Check your finances

Before you invest in a property, be sure to meet with a mortgage broker or an investment-friendly bank. Most buyers don’t realize that a 35 per cent down payment is required to purchase an income property.

While you can sometimes finance your down payment by refinancing your current residence with a line of credit or other investment income, it’s important to check in with your mortgage broker or bank because they may be able to provide alternatives. Some buyers like to use private lenders or ask the owner(s) to hold a first or second mortgage known as a ‘vendor take back’ (VTB). In all cases, gather the information and do your homework.