[Music plays in the background.]
[Expert advice with Scott McGillivray. The CIBC logo. Scott on: Building wealth with an income property.]
[Scott McGillivray sits in a room.]
Scott McGillivray: There's a huge benefit to owning an income property. And the main thing is that you have a hard asset in which you're building your wealth for the future. And there's a few different ways that income properties can help you build wealth. And I always look at the 4 major sources of income from an investment property.
Number 1 is that there's market appreciation over time.
Number 2 is that you can have forced appreciation by doing the right renovations. Basically transforming the property from something that might be in disrepair, to something that's more in keeping with the neighbourhood will add in extra value for you instantly and give you equity.
And then there's the long term benefits. The tenant is making the payments on the house. Therefore, the principal is being paid down and you're recapturing that as the owner. So you have this principal recapture every single month. The principal of the mortgage is being paid down. And then the last and one of my favourite things about owning an income property is the positive cash flow. At the end of the day, you have rent coming in covering your expenses, and then there's a little bit extra, which is, that's your salary.
[Graphic of a house rotates and changes into the CIBC logo.]