Whether it is a single-family home, a duplex, or a commercial building – one of the most important features of a successful income property is its ability to attract reliable long-term tenants.
Here are a few tips to make sure you get the most out of your investment:
Find the Right Area: pick a neighbourhood that has a low crime rate and is close to schools, stores, and/or transit. An area with many job opportunities will attract working professionals. Research rental listings in the neighborhood, if there are many listings available, it can be a sign that the area has a seasonal rental cycle or it is no longer a desirable place to live.
Pick the Right Property: investment properties can be found in all shapes and sizes. Do your research and find a property that will offer you the highest return on your investment. You might consider a single-family home that features a walk-out basement in order to have two separate rental properties.
Attract the Right Tenants: The neighbourhood and the type of living space you invest in will indicate the type of tenant you attract. Example: A large home near a university would most likely be ideal for a group of students, while a small condo in the heart of Toronto would appeal more to a single working professional. A safe, convenient and highly sought-after area will be universally attractive – think about the type of tenant you want, and choose accordingly.
Treat it as a Business: In order to make the most out of your income property, it is important to do the math and make sure you are making a solid investment. Find out how much you will need to invest (short and long-term) from the initial purchase price, to property taxes, to renovations, to paying a property manager (should you choose to delegate this duty) and compare it to the income you will stand to gain from monthly rent. Scour similar rental listings to get a good idea of what you will be able to charge.
Get the Right Help: Hiring a property manager is smart if you do not want to deal with screening tenants, maintenance issues, tenant problems etc. Keep in mind that you will still need to ‘manage’ the manager and it will cost you between 1 to 2 months’ worth of rent each year. Think about how ‘hands on’ you would like to be.
A real estate agent will not only assist you with market intelligence and finding the right property but they can help you with rental applications, credit checks and even lease agreements.
A financial planner and mortgage broker are also critical to ensure you have a reasonable plan for your income property.
Why Invest in an Income Property?
An investment property can bring diversity and significant wealth to a portfolio. Real estate is generally a sound investment and the difference between the money you have put into your investment property and what it will be worth over time will typically increase. Also, the money coming in from your rental will increase your cash flow – allowing you to either decrease the principal on the property or giving you the freedom to make other investments.
Are you considering purchasing an income property? If you have any questions or already have a property in mind, give me a call at 416-921-1112 and I would be happy to help.