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Investing In Real Estate?

Guide to Determining the Best Investment Property

 

Most people looking to invest in the rental property industry do so with the thought to ‘Buy to Build Toward Your Future Investments.’

 

Rental properties may or may not be your only source of income…it may be the extra spending money to assist toward accomplishing goals/dreams or your retirement plan! At the end of the day, purchasing an investment is starting a business adventure and requires good planning and strategy. 

 

As you plan, consider your long-term goals and clearly define what success looks like to you.  The first step is to ask the important questions:

 

  • How much money do I plan to invest upfront?

  • How many rental properties would I like to own?

  • When is my reasoning for property investment?

  • How much money will I need to sustain my investment?

 

Consider the following to build a plan that’s flexible and best suits your goals:

 

  • Purchase price

  • Property value

  • Condition of the property

  • Market conditions

  • Supply and demand

  • Financing options

  • Profit potential

 

Understand the risks:

 

While real estate is one of the safest investments you can make, it’s not without risk.  Tenant issues, potentially high entry and exit costs, vacancies, unexpected repairs and maintenance, and fluctuation in the market can impact your ROI.

 

Whether you’re a beginner real estate investor or a seasoned professional, you’ve found out that real estate formulas are crucial. Things can get overwhelming at times, as you must juggle a multitude of different figures and evaluate which property calculations are relevant to you. There are several Formulas that can be used to help determine whether a property may make a good investment.

When shopping for the ideal investment property, it is important to consider other very important aspects such as:

  • Convenient neighborhoods such as:

  • Walking distance to amenities

  • Public transportation

  • Popular family neighborhoods close to schools and quick access to bus routes

  • Ample parking

  • Good size or equally sized bedrooms appropriate for either families or roommates

  • Ground level entrance basement apartments with large windows creating lots of light and eliminating winter shoveling out of wells (alternatively, covered wells)

  • Type of heating

  • Separate meters for utility bills

  • Separate water heaters

  • Laundry facilities

  • Storage areas/sheds

  • Consideration to the current rental market (for ex; time of year)

  • Consideration to updates that may be required for rent ready units

  • Consideration to future maintenance requirements

  • Understanding of the demographics of the tenants that will be drawn to the property

  • Little extras – dishwashers, fenced yard

 

Think twice about a fixer-upper as your first investment property:

A fixer-upper can be super tempting, especially if you’re extra handy and can do a lot of repairs yourself to save money.  However, buying a rent-ready property that may need minor repairs can save money from the start.

 

Start average.  The more expensive the purchase price, the more expensive your ongoing and maintenance expenses will be.  Shoot for a low-cost or mid-range home.  Don’t select the nicest home on the block, but don’t select the worst home!

 

WE CAN HELP YOU:

 

To maximize on your investment, you may want to consider hiring an experienced and knowledgeable Property Management Company. Property Managers have the expertise to navigate tenant relations through local Residential Tenancies boards, a knowledge of the current rental markets, advertising platforms and teams of local subcontractors all of which can mean savings in both time and money for you!

 

The biggest part of budgeting for your investment is knowing how much rental income you can expect.  This is where your experienced and professional Property Management Company comes in!

 

Budgeting for Operating Expenses:

  • You can expect your operating expenses to be between 35% - 70% of your rental income, depending on things like the condition of the property when you purchase, how well your tenants treat it and so on. 

  • To be safe, plan for a 50/50 split.  Ex: if you charge $1800 per month for rent, expect $900 of that to go toward you operating expenses.

 

If you're interested in generating security through real estate property investment, let’s talk! We are passionate and knowledgeable as much as we thrive on seeing you take steps to build on your financial future!

 

We can help you work through the pros and cons of purchasing your rental investment, the best neighbourhoods to consider and answer all your outstanding questions!

Taking the Key