Thinking of Buying Investment Property? There are a few things to consider before hand….
Buying into the real estate market is a dream many have. Many rush into this dream and think renting out the property will make them rich. You can make extra income out of a rental property if you know what to do. In this month's article, we discuss some key points to consider.
What area are you interested in investing? I know this sounds simple, but really it's not. If you are looking to rent to a specific demographic, be certain to study the neighbourhood. For example, if you want to gear your rental to University students, then make your target neighbourhood around it. Students are going to want to be close to bus routes, shopping and ideally close to the University. Do you know the by-laws for housing? If using a Realtor, don't rely on them to know all the by-laws. You will want to know how many rentals are in the area. How many persons are allowed to rent at the property? What kind of real property are you buying? Semi, duplex, triplex, or is it considered a lodging/border house?
After you have figured out the area and type of housing, now how do you get renters? Where to advertise, where not to advertise? How do you screen them? How do you write up the lease? How do you get the rent payments? Advertising can be tricky, especially when there are many scams out there. Do you know how to ask the right questions to make sure the potential applicant is qualified? Leases now in the Province of Ontario are written up in a standard document supplied by the government of Ontario. Which is available online.
Check with your city hall too, on what by-laws are necessary. What is the legal number of people in a house? How many units can you legally have in an individual building? What precautions (building and fire codes) are necessary when renting out a duplex(for example)?
Lastly, how do you collect rent? You can make a suggestion of post-dated cheques, but legally you cannot demand them. You can ask for pre-authorized payment withdrawal each month, and even e-transfers. But the tenant legally can say CASH.
Now onto the next steps. The tenant calls to say the furnace is broken or the stove no longer works. As the landlord, you must repair these items in a timely fashion. You, however, have a problem, you work full time. Not only are you working full time, you are now a full time landlord. Every month you must collect the rent, and if you are lucky, there is no maintenance calls, but if there is, you need to either fix it yourself (if you are handy) or hire someone. Either way this will cost you money and time.
By this time in the process, many landlords or owners are ready to throw in the proverbial towel. A landlord will start to question how did it get this far????
But there is hope.
Enter a company such as Property Link Management Services. A company like ours, works as the "middleman". We are the ones that will, screen the tenants for you; from initial contact, showing and screening applications, to collecting rent, and doing the maintenance repairs. For a fee each month you have the reassurance that someone else is looking after your property and you can enjoy the benefits of owning rental property and earning an extra income from it, without the headaches.
We can assist in letting you know the area your income property is located in – what your target market is going to be. Let you become aware of the upgrades (if any) that need to be done to boost the rent potential. We have a team of experts in their individual fields to assist in the complete process.
If you are interested in knowing more on how to run a successful income property contact us! We would be more than happy to show you how to be successful at it.