AFFORDABLE HOUSING
The best approach , in my view , is to purchase an investment property through a company with the shares held in a Holdings Trust and rent it from that entity . This allows you to combine the benefits of renting and owning while creating long-term wealth .
• Increased Net Rental Yield : Renting from your investment entity boosts returns by saving on management fees and generating rental income from additional units .
• Reduced Vacancy Risks : Living in the main unit ensures at least one occupied space , while tenants in other units provide reliable cash flow .
• Capital Efficiency with Renting : Renting in expensive areas frees up funds for higher-yield investment properties , avoiding tying up capital in non-income-generating homes .
Additionally , having multiple rental units on the property — such as a house with cottages or apartments — can provide you with rental income even while you live in the main house . Let ’ s explore how this works and why it may be a winning strategy .
The Case for Renting from Your Investment Entity Owning a property through a company with shares held in a Holdings Trust opens up numerous benefits . Renting the property from this entity while living in it , particularly if it has multiple units , offers unique advantages :
1 . Increased Net Rental Yield When you manage the property yourself , you save on rental commissions and other management fees . This improves the net rental yield and enhances your overall return on investment . Additionally , having tenants in the additional units on your property creates a steady stream of income to offset your living expenses .
2 . Reduced Vacancy and Default Risks Living in the main house of your investment property removes the risk of vacancies and defaults for at least one unit — the one you occupy . Meanwhile , the tenants in the other units provide regular rental income . This setup allows you to plan your finances effectively while benefiting from immediate cash flow .
3 . Opportunities for Value-Adding Renovations As the owner-occupier of the main unit , you can renovate the property to enhance its overall appeal and value . These upgrades benefit not only your living experience but also the property ’ s market value . The improvements can lead to increased rental income for the other units , ensuring long-term profitability .
By adopting this approach , you can live in a home you enjoy while turning the additional units into income-generating assets . It ’ s a practical way to achieve both lifestyle and financial goals .
56 REI MAGAZINE DECEMBER 2024 / JANUARY 2025