Guide to Buying an Investment Property or Secondary Suite Home in Ottawa

Build wealth, not just square footage.

Across Ottawa, many buyers are looking beyond a traditional home purchase and exploring real estate options that generate income or support long-term financial growth. For some, this means purchasing a new-build property as a dedicated rental. For others, it means choosing a family home with a legal secondary suite that provides monthly income, helps with mortgage qualification, or offers flexibility for future needs.

Both paths support a stronger financial foundation, and both are made easier through thoughtful planning and clear information. Ottawa remains one of Canada’s most stable and reliable real estate markets, with consistent rental demand, low vacancy rates, and long-term appreciation that gives buyers confidence in the years ahead.

In this guide, you will find practical advice on evaluating the right strategy, navigating financing, understanding legal requirements, and choosing a community that attracts reliable tenants.

 

Why Invest in Ottawa Real Estate?

Ottawa has long been viewed as one of the country’s most resilient markets. Its steady growth and balanced economy create a reliable environment for investors and income suite homeowners.

A Stable and Diverse Economic Base

Federal government departments, national agencies, universities, hospitals, and a thriving tech sector all support consistent housing needs. Tenants include students, public servants, tech professionals, newcomers to Canada, and families seeking long-term rentals.

Strong Rental Demand

Ottawa’s vacancy rate has remained among the lowest in Ontario. Demand is consistently high across neighbourhoods like Orleans, Stittsville, Barrhaven, and Kanata, which attract renters who want suburban comfort along with good schools, parks, and access to transportation.

Long-term Appreciation

Ottawa’s steady value growth gives investors confidence that today’s purchase will continue to serve them well in the future. While markets shift, Ottawa’s moderated pace and stable employment environment help protect long-term investment value.

Understanding Ottawa’s Vacant Unit Tax

Ottawa applies a one percent tax on residential properties left vacant for more than six months a year. Owners must file an annual declaration to confirm occupancy or tenancy. For most investors, this is simple to manage, but it is important to stay compliant to avoid penalties.

 

Choosing Your Investment Strategy

Investment homes generally follow two paths. Each has unique advantages depending on your financial goals and comfort level.

Option 1: Purchasing a New-build Property as a Pure Rental

This approach suits buyers who want to build a real estate portfolio. A dedicated rental property provides:

  • Predictable rental income
  • Full control over the asset without occupying it
  • Long-term appreciation while tenants cover carrying costs
  • The option of professional property management for hands-off ownership

Because the owner does not live in the home, lenders usually require a minimum down payment of 20 percent. This reduces risk and helps ensure comfortable carrying costs.

Pure rental properties often appeal to investors who want a straightforward, stable asset in a city that historically performs well. New-build rentals offer the added benefit of lower maintenance and fewer unexpected repairs.

Option 2: Owning a Home with a Legal Secondary Suite

A home with a legal basement apartment or secondary unit is a flexible option that works for many households. Benefits include:

  • A lower entry barrier, since owner-occupied homes may qualify with smaller down payments
  • The ability to use projected rent toward mortgage qualification
  • Future resale appeal
  • Flexibility for multigenerational living or extended family support

Most lenders allow a portion of your suite income to count toward your mortgage approval. CMHC also recognizes secondary suite income within their insured programs, making this a powerful tool for buyers who want more purchasing power while keeping monthly payments balanced.

 

Crunching the Numbers

Investment properties are most successful when the financial picture is clear and realistic. Understanding down payments, qualification rules, and basic return calculations helps you make informed decisions.

Down Payments and Financing

For a property where you will live in one of the units, down payments may range from 5 to 10 percent depending on purchase price and lender guidelines. For non-owner-occupied investment properties, 20 percent or more is typical.

If you are upgrading from an existing home, you may be able to:

  • Port your mortgage
  • Access a home equity line of credit
  • Use bridge financing during the transition period

These tools help keep the process smooth and financially comfortable.

Using Rental Income to Qualify

Lenders use two common methods when considering suite or rental income:

  1. The offset method, where a percentage of rent reduces your mortgage expenses for qualification
  2. The add-back method, where a percentage of rent is added to your income

For example, if projected rent is $2,000 per month and your lender allows a 60 percent offset, then $1,200 is applied to your qualification, reducing the mortgage payment used in calculations. This increases your purchasing power and may help secure the home that fits your goals.

Return on Investment and Cash Flow

A simple way to measure performance is to calculate the capitalization rate:

Net Operating Income divided by Total Investment = Cap Rate

A higher cap rate generally indicates stronger performance, though new builds often achieve value in stability, maintenance savings, and long-term appreciation rather than high short-term cash flow.

Investors may also track cash flow, mortgage paydown, and value appreciation to understand the full financial picture.

 

Taxes, Rebates, and Landlord Requirements

Investment properties come with responsibilities, but also with financial advantages when managed correctly.

HST and the NRRP Rebate

New-build investment properties are subject to HST. However, landlords who rent to long-term tenants may qualify for the New Residential Rental Property (NRRP) Rebate. This rebate returns a portion of the HST after occupancy. Timelines are strict, so buyers should begin the process soon after closing.

Landlord Obligations

Ontario’s Residential Tenancies Act outlines the rules for leases, deposits, rent increases, and maintenance responsibilities. Every landlord must use the Ontario Standard Lease form for new tenancies. Understanding these rules keeps both the owner and tenant protected.

Insurance Considerations

If your property will be rented, you will need landlord insurance rather than a standard homeowner policy. This protects the building, liability, and potential loss of rental income in specific situations.

Vacant Unit Tax Reminders

Every Ottawa homeowner must submit an annual occupancy declaration. Failure to declare may result in the property being deemed vacant and taxed.

 

Choosing the Right Property Type

Different property types attract different tenants and support different investment goals.

Single-family or Townhome Rentals

These homes attract long-term tenants such as families, young professionals, or newcomers who want stability. They typically offer lower turnover and predictable maintenance. A finished basement can increase value, especially if used as a legal suite.

Glenview’s New Home Journey Map

Condo Investments

Condos often have a lower entry price, which appeals to first-time investors. Monthly condo fees should be factored into the cash flow calculation, and investors must review rules regarding short-term rentals. Evaluating the condo corporation’s financial health is essential before purchasing.

Selecting the Right Community

Location plays a meaningful role in tenant demand and long-term value. Ottawa’s suburban communities attract a range of reliable renters.

  • Orleans: Known for affordability, walkable amenities, and a strong family-friendly atmosphere. Renters appreciate the balance of value and comfort.
  • Stittsville: A favourite among professionals and families. Parks, schools, and convenient access to Kanata’s tech sector make it a strong rental market.
  • Barrhaven: A rapidly growing suburban hub with excellent transit connections, expanding retail areas, and strong demand from commuters and families.

A simple checklist can guide your community selection:

  • Proximity to schools and childcare
  • Walkability and parks
  • Bus routes and future transit plans
  • Local employment centres
  • Neighbourhood feel and tenant appeal

 

Preparing Your Property for Rent

A well-prepared property attracts strong tenants and helps maintain long-term value.

Smart, Low-maintenance Upgrades

Investors often choose finishes that wear well and reduce upkeep. Popular choices include:

  • Durable flooring
  • Easy-clean countertops
  • Quality paint
  • Upgraded storage
  • Energy-efficient fixtures

Setting Competitive Rent

Tools like CMHC rent reports help investors understand average prices in each neighbourhood. Competitive, well-researched pricing leads to faster tenant placement and stronger long-term relationships.

Screening Tenants

Clear communication, reference checks, and proof of income help ensure reliable tenancies. A consistent screening process benefits both parties.

 

Managing Your Rental or Suite

Investors generally choose between self-management and hiring a property manager.

  1. Self-management: This option offers higher monthly returns but requires more involvement. Owners handle tenant communication, repairs, inspections, and record-keeping.
  2. Property Managers: Typical fees range from 8 to 10 percent of monthly rent. In exchange, managers handle advertising, tenant screening, maintenance coordination, and rental regulations. Many investors appreciate this peace of mind.

Maintenance Planning

A common practice is to set aside 5 to 10 percent of annual rent for maintenance. This creates a cushion for repairs and helps protect cash flow.

Record Keeping

Accurate records support tax filings and track expenses such as repairs, interest, and upgrades. Organized documentation also helps during refinancing or future sale.

 

Risk Management and Legal Protection

Successful investing includes preparing for the unexpected. Consider:

  • Liability insurance
  • Regular safety inspections
  • Functioning smoke and carbon monoxide alarms
  • Complying with landlord and tenant laws
  • Maintaining proper permits for secondary suites

Useful resources include the Ontario Standard Lease form and the Landlord Self-Help Centre.

 

FAQs

Can I buy a new Glenview home as a rental property?

Yes, many Glenview models work well as long-term rental properties or can be designed with a legal secondary suite. If you plan to use the home purely as an investment, most lenders will require a down payment of at least 20 percent. This helps manage carrying costs and reduces financial risk, especially in the early months of ownership.

What is the minimum down payment for a home with a legal suite?

If you plan to live in one unit and rent out the other, down payments may start as low as 5 percent, depending on the purchase price and loan insurer guidelines. This makes owner-occupied suite homes an appealing entry point for buyers who want both a comfortable residence and a monthly income that supports affordability.

Can I use rental income to qualify for a mortgage?

Yes. Most lenders allow a portion of projected rent to help with qualification, which increases your borrowing power. The amount varies by lender, but ratios often range from 50 to 80 percent. This income can make it much easier to secure the home that aligns with your investment goals and future plans.

Is HST included on a new-build investment property?

HST does apply to new-build investment purchases. However, landlords who rent the home to long-term tenants can usually apply for the New Residential Rental Property Rebate. This rebate returns a portion of the HST after the tenant takes possession, helping to reduce the upfront cost of investment.

Are basement apartments legal in Ottawa?

Yes. Most residential zones in Ottawa permit one secondary suite or basement apartment, as long as it meets zoning, safety, and building code requirements. This includes proper egress, fire separation, ventilation, and permits. A fully legal suite protects both the homeowner and tenant and ensures smoother insurance and financing processes.

What is the Ottawa Vacant Unit Tax?

Ottawa charges a one percent tax on properties that sit vacant for more than six months per year. All owners must file an annual declaration confirming occupancy or tenancy to avoid the charge. For investors with active tenants, the process is simple, but it is important not to miss the submission deadline.

Do I need a property manager?

Hiring a manager is optional. Some investors prefer hands-on involvement, while others choose to delegate day-to-day responsibilities such as tenant screening, maintenance coordination, and rent collection. Property managers typically charge 8 to 10 percent of monthly rent, and many owners find the reduced workload well worth the cost.

Let’s begin this journey together.