Do you dream of owning an income property? The idea of a steady income and increasing real estate prices make it an attractive idea for many. But before you buy it’s important to take some time to consider the risks and rewards.
These 5 tips will start you down the path and as an owner of income properties I can help you make sure the property fits with your goals.
- Check your finances.
Many buyers don’t realize that you are required to have a down payment of 20% to purchase an income property. It is important to check with your mortgage broker or bank to understand how you can finance your purchase and what options are available for you.
- Look at what the property has to offer.
When you’re first starting out it’s often a good idea to invest in a property in a neighbourhood you know well. Being familiar with the neighbourhood means you’ll know about amenities, schools, public transportation and will then be able to share that info with potential tenants. Do your research online and then drive by them. For all properties, visit them in person and if there are multiple units view each of the them carefully. If repairs or renovations need to be done be sure get estimates so you know what you’re getting into.
- Make sure it’s a good investment.
Know what your net income will be. That will determine if it’s a good investment or now. If you’re not sure how to calculate this, your agent or mortgage broker will assist you.
- Understand the Residential Tenancies Act of Ontario (RTA)
When you buy an investment property, you become a landlord. It is very important that you understand the Residential Tenancies Act of Ontario (RTA) – what your rights and responsibilities are and what the tenants are as well.
- Don’t forget about insurance.
Your rental property is a very valuable asset. Make sure you have the right insurance solution to protect your property from the financial impact of unforeseen events.
If you’re thinking of purchasing an investment property or are in the early stages of exploring what the options are, call Mike and set up an appointment.