Whether you are a seasoned investor/landlord or new to the investment property scene, there are many factors to take into account before committing large sums of money.
Let’s consider Niagara Real Estate, first off you will need to establish the rate of return on your investment, both in terms of capital appreciation (real estate rising in value) and rental return. How much deposit will you be putting down? How much will financing cost? What is your main investment goal?
It may be that a high rental return will allow you to cover all your expenses (taxes, utilities, loan repayments, insurances, etc.) and that you intend to hold the investment for years to come. Capital appreciation might not be your main motivation in this case, meaning you might choose to purchase in a less desirable area and achieve, maybe 10% per annum return on rent but very little increase in the value of the asset.
Establishing the level of demand for your residential property is critical. There is no point in purchasing a house or apartment building in an area where many empty homes already exist. Similarly, if thinking of buying student housing near a college or university, check there is not already an over-supply.
You will need to factor in repair/renovation costs and rent absence periods (vacancy rate). Even the most desirable rental unit will occasionally stand empty and it is essential to allow a percentage per annum for this. The prudent investor will base his or her calculations on a 10 month rental occupancy per annum.
You will be well advised to study the Residential Tenancies Act and make sure you comply with it’s rules, also fire regulations, local zoning rules, etc.
When searching for tenants, always get references and be very thorough – make sure each party is clear what they expect from each other.
With Niagara Real Estate, owning investment properties can be a very rewarding and can earn you a profitable return on your money provided you do your due diligence, choose the correct properties and stay in control of the various aspects that can easily take over.
Building a portfolio of rental units that are well maintained, rented at a fair price and in a ‘good demand’ area, and where the income exceeds all outgoings by an increasing margin year on year will ensure you have a great future as a landlord and will set you up for a good pension too.
If you are at the point of searching for the right house, apartment, town-home, complex, etc. and know the general area where you wish to buy, please get in touch with me and I will be pleased to line up some showings for you.