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What to Consider Before Purchasing an Investment Property
By Ann Smith,
Broker
Purchasing a property for investment purposes can be a great way to
increased wealth. It may provide a nice nest egg for retirement down the
road, but if you’re jumping in for the first time, there are many factors
to consider.
·
What’s
your credit rating?
·
What can
you afford? You may be able to easily afford a student rental property but
don’t forget to factor in the increased maintenance costs.
·
If
you’re planning on managing the property yourself, buy it close to home.
·
How
handy are you around your current home and what resources are available to
you – and at what cost? This includes everything from fixing holes in the
walls and painting to major plumbing and electrical work.
·
View the
property as if you were planning on living there...what changes or
renovations will be required?
·
What
bylaws exist in the neighbourhood regarding rental properties?
·
What
building permits would be required?
·
Confirm
all utility costs with the local utility offices (you’ll want that
information to know whether you should include them in the rent).
·
Do you
understand your rights as a landlord – and those of the tenants? (See the
Landlord & Tenant Board site for details.) And if the property is part
of a condo complex or gated community,
there will be a unique
set of rules, regulations, and by-laws imposed that you should consider.
·
Will
your current cash flow carry two homes if you don’t immediately find
tenants?
·
Do you
have a minimum of 10% of the property value available to cover any
unforeseen problems? They will happen!
Before
you take the first step, know why you are looking at purchasing an
investment property. If it’s to fix up and flip, understand the current
market conditions. And if it’s to be included as part of your retirement
plan, purchasing a property in an area that is just becoming trendy may pay
off well down the road. But it could also backfire. Talk to a reputable
Realtor who knows the in’s and out’s of investment properties.
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Ann
Smith, Broker
Your Real
Estate Consultant…For Life! |