There is no doubt many Canadians dream of owning investment properties. There's many advantages to it! For instance, renting spaces out as commerical or residential areas can generate a substantial income over time! There's a variety of options to choose from as well. Among the many options, individuals can invest in second homes, townhouses, condo's, duplexes, rooming houses or multi unit residential buildings!
Although the advantages are great, there are many things to consider when buying income producing properties. Below are tips you can use to securly land your own investment propety:
1. CHECK YOUR FINANCES
Before you invest in a property, make sure you firstly meet with a mortgage broker or an investment-friendly bank! Most buyers do not realize that a 35% down payment is required to purchase an income property. Even though you can sometimes finance your downpayment by refinancing your current residence with a line of credit, it's good to check with your bank in order to avoid any surprises. Other alternatives maybe availble as well like using a private lender or going through a vendor take back (VTB).
2. WHAT DOES THE PROPERTY HAVE TO OFFER?
It is best to invest in a property located in a familiar neighbourhood. Having nearby amenities is a good selling function when searching for potential tenants. Most tenants prefer to be within walking distance of public transportation and local services.
3. DO YOUR DUE DILIGENCE
When looking for a property to invest in, it's helpful to do your research. Whether that research is online or through a professional Real Estate Salesperson, it's important to visit the property in person and view the units carefully. If you come across a suitable property, make sure you have a conditional offer on a building inspection, obtaining financing and mortgage appraisal, reveiwing the leases, income statements, expenses, fire retrofit certificate, if applicable, and any other items recomended by a professional.
After gaining access to all that information, calculate the costs of repairs and improvements needed after the inspection and present it to the owner. Often times, an adjustment to the sale price is performed, unless the costs of repairs and improvements were already reflected in the price presented!
4. UNDERSTAND RESIDENTIAL TENANCIES ACT OF ONTARIO (RTA)
When buying a second property, you become a landlord. This means that you will be taking on extra responsibilities and must be familiar with the Residential Tenancies Act of Ontario. While you can hire a property manager to deal with the day-to-day workings, you will still need to understand the RTA and its updated legislation!!
Have Questions regarding Real Estate? The Iris and Evelyn team are here to help! With their countless years of buying and selling Real Estate Properties, their experience and knowledge can help you make the right choice!
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