There are a lot of ways to get into real estate these days, but one that has been growing in popularity over the last few years has been mid-term rentals. And it could be the easiest way for Canadians to create extra cash.
So, what are mid-term rentals exactly? And is it right for you? Let’s get into the ups and downs of this strategy.
That “mid” term
When it comes to rental agreements, Canadians might think of two things. First, they might think of long-term lease agreements, where you loan out your home for years, potentially as an apartment or something. Then, there are short-term rentals of one to 30 days, which is what you would do through something like VRBO.
But what seems to get forgotten is the middle ground. This is where some big cash can come in. Canadians could offer up their home to a guest for one month to a year! Perhaps it’s someone moving to the area to work or go to school for a year, for example. This has been a very popular strategy in Europe for years, yet it is slowly drifting to our side of the world.
What’s great is that you can charge less than short-term rentals but more than long-term ones. It’s a happy middle ground that students, travelling workers, and even corporations can take advantage of for up to a year.
How to get started
Of course, there are already many companies offering a way to get started on mid-term rentals right away. Companies such as Kopa and Airbnb are popular options offering you locations around the world. Then, there are real estate companies and co-living companies that can be sourced as well.
You could also just post the offering through social media, but I would urge using a middle company. If you’re wanting to be a lazy landlord, let them do the heavy lifting for you. That would include payments, insurance, and verification. They can also help determine what you should charge for what you offer in the area you’re living.
But after this heavy-ish lifting, you could be bringing in a lot of cash these days. If you’re living in a desirable place, that could be around $1,500 a month. That adds up to $18,000 per year! Of course, that will be taxed, but even so! That’s cash you can then use to create tax-free income.
Even more real estate
If you want to create even more passive income as a lazy landlord, consider investing that cash into real estate investment trusts (REITs). These are companies that pay around 90% of their after-tax income to shareholders, usually in the form of dividends. Pop that into a Tax-Free Savings Account (TFSA), and you’re getting that all tax-free!
A great option right now could be Primaris REIT (TSX:PMZ.UN). The company looks positioned to deliver strong earnings and could, in fact, surprise estimates when delivering its fourth-quarter results. Primaris REIT should also show signs of perhaps selling non-core assets to create even more cash for the year.
Right now, Primaris stock offers a dividend yield of 6.01% for investors. So, let’s say you were to put that passive income of $18,000 into Primaris stock and see it rise to 52-week highs. Here is what you could bring in.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| PMZ.UN – now | $13.50 | 1,333 | $0.84 | $1,119.72 | monthly | $18,000 |
| PMZ.UN – highs | $16 | 1,333 | $0.84 | $1,119.72 | monthly | $21,328 |
You could make $18,000 into passive income, turn it into $21,328, and add $1,119.72 in dividends. That’s total passive income of $22,447.72! So, add in that passive income and be the lazy landlord of your dreams.
