DO’S & DON’TS when buying your first investment property…
DO get pre-approved for a mortgage with either your bank or a mortgage broker. Investment properties typically require a larger down payment than does a primary residence, get all the facts from your lender before you start shopping!
DON’T buy an overly unique home! You want to make sure that your investment property is going to be easily saleable if and when you decide to sell. Buying a house with a pool, shared driveway or an undesirable layout won’t appeal to the masses and could limit your potential buyers when that time comes.
DO find the right location! Keep your investment property in a city versus a rural area and in close proximity to shopping, transportation and other amenities. This will make your investment property more desirable by not limiting prospective tenants and in turn making your property easier to rent.
DON’T expect to get a huge return right away. Like most investments a rental property won’t produce a large monthly profit right off the bat, it will take some time for your property to appreciate in value, as you pay off your mortgage you will increase your monthly profit.
DO buy an investment property with room for improvements. Having an opportunity to renovate will allow you to add value, just be aware that not all renovations add the same amount of value and they typically won’t translate dollar for dollar. Be mindful and consult with a real estate professional prior to any reno project to ensure you’re making the most of your renovation dollars.
DON’T forget about the maintenance. Just like your primary residence your rental property will require maintenance all the way from regular wear and tear to larger items – examples include a new roof or furnace. Be sure that you budget for expected as well as unexpected maintenance.
DO have a good understanding of your rights and responsibilities as a landlord as well as your tenants rights and responsibilities. http://www.mah.gov.on.ca/page137.aspx
DON’T overlook the market you are investing in. Find out the current vacancy rate and market rent. You wan’t to know that there’s demand for rental properties in that area and what exactly you can expect as a return on your investment.
DO screen your tenants. Be sure that you do all the proper follow up and research before signing a lease and handing over the keys. This is the number one best way to protect your investment.
For more tips or questions about investing in real estate contact us at (226) 883-2336.