Many people that I talk to ask me questions about what they would need to do in order to jump into the rental market as a landlord. Investment properties have become a very popular topic, especially with recent news about the average condo rental prices in a variety of areas in the GTA. Have you dreamt of being the owner of a rental property? If so, just know that the rental market continues to be favourable for investors. That said, there are a few things anyone looking to become a landlord needs to be aware of before doing so.
- Regular monthly income: Yes, having the ability to invest in a rental property does bring with a recurring revenue stream if you find solid tenants. Once you factor in all of your costs, the income can be fairly predictable. That being said, there can be some tax implications. Understanding how new income can affect your overall income is necessary. This is why having a mortgage broker you trust to help you through the process is very important before jumping right in!
- Unexpected expenses: Now, while the income is predictable there is always the chance of an unexpected expense. If you’re prepared for the unexpected, then this is more than manageable. It’s important to budget 2% of the purchase price of your property for maintenance and repairs. Also, there’s always the possibility of needing a rainy day fund to cover operating costs if your property is vacated and you don’t find new tenants immediately.
- Tenants are as important as location: As is always the case “location, location, location,” is what people looking to purchase a rental property. Places in larger urban areas tend to generate better rates even when factoring in price. That said, who you rent your place to is so important to ensuring that your time as a landlord is as smooth as possible. To ensure numbers 1 and 2 on this list are covered, you need responsible and reliable tenants who pay on time and are good to work with. Background and credit checks are a MUST to ensure that you aren’t being led astray by potentially poor choices for clients.
Now, those are just a few of the basic things to consider. Investment properties can be a terrific source of asset creation for your family in the short and long-term. If you truly are serious, working with the right professionals is imperative to your long-term success as a rental property owner.
Let me help you. Feel free to get in touch with ME anytime and I’ll be happy to get you on your way to a mortgage/loan that’s right for you and your loved ones.