I’ve had several conversations the last few months about purchasing, managing and owning investment properties. Here’s a guide to help you get in the game! Point by point guidance to get started.
- What to BUY?
A duplex, triplex, fourplex, townhouse, home or condo… there are many options! It all comes down to selecting a property that will produce income. You want to ensure your purchase is going to make you money and grow in value.
- Get Financing!
Buying a rental property with a mortgage is called “Non-Owner Occupied” financing and the bank requires a larger down payment, typically 20%. Call your favorite lender to get qualified or ask me for a recommendation any time!
- Where to BUY?
I often ask people, where would you want to rent? Close to the downtown core, near your work or transportation and in an area that’s highly desirable? It’s better to buy in an area where you’ll get ideal tenants, who can pay the rent and cause you little drama. We all know where these areas are and they make the most in rental income in addition to growing in appreciation as your tenants pay the mortgage.
- Managing the Property
Now you have a property in mind, do you want to manage it or hire it out? A typical management company will charge you each time they place a tenant (one months rent) and then 10% of the rent each month. If the tenants don’t pay or have a repair problem you aren’t the one having to deal with the issues. It’s peace of mind and also a deductible expense. I’ve helped several clients secure an awesome tenant and then fade into the background as they manage the property themselves. I’m a wealth of information and resources and always available to answer any questions.
Start small if you’re new to the game! If the property ‘breaks even’ and is in a good area you won’t regret the purchase. There are so many tax benefits, ask your accountant. There is always a risk to owning any property so make sure you do your homework and work with a real estate agent who’s experienced in this process. Whether you’re interested in buying your 1st investment property or your 20th property, I’d love to discuss the possibilities with you, contact me today!