Kofsky Mortgage

Generate Higher ROI To Pay Off Your Mortgage

In Vancouver BC, it always appears that the real estate market is going up. Everyone is trying to get a piece of the action and get involved. Investing in real estate is a great way to accumulate wealth but the key is to ensure you are properly managing your money as well as your income suite or property.

Although the motivations may differ between homeowners and investors, as some may want money for retirement, having a baby or wedding, or simply have the suite as a mortgage helper. Regardless of your goals, it’s important to measure return on investment (ROI) to determine profitability.

To calculate the profit or gain on any investment, first take the total return on the investment and subtract the original cost of the investment. Here is a simple formula:

ROI = net income (gross income – costs) ÷ costs

When reviewing your ROI, you must consider four main factors

  • Mortgage, Property Tax (and other debt)
  • Maintenance and potential renovation
  • Equity
  • Income

Mortgage, Property Tax (and other debt)

One of the biggest costs of property investment is any debt that was paid or one that needs to be paid connected to that investment. One of the most common debts is usually the largest and that is your mortgage loan. Your mortgage can make or break your potential investment. Many homeowners get stuck on searching for the best rate but a mortgage loan is much more than just a simple number on a piece of paper. Lenders can trap you if fail to grasp the terms, conditions, penalties, and options of the loan and this can be the difference in the tens of thousands.

Property tax and insurance are other important factors in determining a property’s ROI. They are two expenses that a third party (BC Assessment and/or insurance companies) will review and make the final determination of the cost. Further, if you are looking at purchasing a condo, you will want to pay close attention to any upcoming special assessments and strata fees, as these are also costs that can be easily overlooked.

Maintenance and potential renovation

If you have ever owned property you have likely come across repairs or undergone renovations. Faulty wiring, plumbing issues, and furnace problems are common costs for income suite and property owners. On top of that, even if it is correct they will need to be routinely maintained to ensure they remain functional. These potential and variable additional costs must be considered for your property ROI.  On the other hand, an excellent renovation can increase the value of your home, give a better first impression, and attract a higher quality tenant for your property. If done correctly, you can ensure a profitable business for years to come.


Properties value changes over time and ideally it increases and your real estate property builds equity. As you pay off your mortgage and the property ideally increases, you will have a few options available to you. You can potentially dip into that equity and take out a home equity line of credit and choose to reinvest it into this property or potentially leverage those additional funds and purchase another property.


Tenants are typically a property’s main source of income. The number of tenants that are renting out your property, the amount you charge your tenants, and the frequency at which you charge them, be it nightly, monthly, or annual; all contribute to your property’s income, which affects its ROI.

To give yourself the best possible ROI for your income suite or rental property it needs to be cash-flow positive. Thus, having a tenant in the suite as often as possible is critical to receiving the highest ROI and ensuring the largest amount of cash flow and positive income.

You will also want to ensure you get the right tenants. It’s important to carefully screen all your tenants and create a detailed lease and a very clear set of rules and instructions. I recommend you find a professional real estate lawyer who is familiar with the local laws that can help you craft a document that makes sense for both landlords and tenants. If you are planning on not being an active manager of your property, I recommend researching for a qualified property manager to watch over your property. Depending on what you choose affects your ROI.

You can potentially escape any long-term tenant headaches by establishing a short-term rental business but just be aware of the current bylaws, rules, and how short term rentals can affect your mortgage and home insurance. Some lenders look down short-term rental income and may not include this income in their mortgage qualification calculations. The income can be seen as inconsistent and quite variable so it is best to ensure you get placed with the right lender who understands your financial goals and one that is willing to be flexible to work with you.

Your best mortgage advice comes from an independent mortgage broker and a management team who can help you find the best mortgage and strategic fit. There are always new programs and opportunities out there that you can access with the right experts in your corner. The key is to talk to your realtor, mortgage, and property management professionals proactively so you know your options.

Do you have a vacant rental in Vancouver? HostGenius, Vancouver’s Expert Property Management can help! We have a broad professional network chock-full of tenants who are looking for rentals in Vancouver. Contact our Vancouver property management team to see how we can help.

If you need a partner that can guide you through this process, please give me a call anytime at 604-202-9913. I am happy to work together with you and find the best mortgage solution for you.