The idea of a steady monthly income is appealing, and today’s low-interest rates make the idea even more attractive. Investing in a rental property can be profitable, but it’s not without risks. While real estate is one of the safest, risk-free ways to earn money, owners are still responsible for paying the mortgage, property taxes, and other expenses.
Get your finances in order - Canada’s mortgage rules dictate that you must come up with a minimum down payment of 20% for a small rental property. If you are living on-site in one of the units, this policy may not apply. Aside from your down payment and mortgage, what you spend on utilities, maintenance, repairs, and upgrades really add up. For this reason, it’s advisable that your first rental property isn't a fixer-upper. Budget a small percentage for maintenance and repairs. You’ll also need to budget to cover operating costs if your property is vacated and you don’t find new tenants to fill the spot quickly enough.
Figure Out Your Target Audience - Your best bet is to buy where there are good jobs and population growth. Find out what the going rents are, what they have been historically, and what occupancy rates are like. What kind of property do you want? What is an ideal location? Think of the demographic you want to attract and sign as tenants. This plays an important role in the location and type of property that they purchase. *Example: Post-secondary students would look for a place close to a bus route/the school they're enrolled in.
Consider hiring a property manager - Not everyone has the time to respond to tenants and deal with repairs — especially in emergency situations. While the cost of hiring a property manager will cut into your monthly income, it will also reduce your stress level.
Educate yourself on landlord-tenant laws - The laws are different in every province, but they are in place to protect both the landlord and the renter in case either neglect their responsibilities.
Making such a big investment makes most sense when you have a team of professionals to help guide you through the process.
Contact a REALTOR® today to learn more about finding and managing your new rental property.
Looking for an experienced REALTOR ® that specializes in real estate across Windsor and Essex County? At Royal LePage Binder Real Estate, we are focused on helping you unlock your future.
