10 Things to Ponder When Considering Residential Investment Properties
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Becoming a real estate investor might sound appealing to you. Maybe you know someone who is in that market, or maybe you just saw an Instagram Reel saying how easy it is to get started as an investor. Either way, there are some truths and downright hilarious ideas of what it takes to be a real estate investor.
Below are 10 (out of about a million) things to bear in mind when considering life as a real estate investor.
#1 Yes, landlords make money in their sleep – but they also get calls about leaking toilets and broken furnaces in the middle of the night. You need to be prepared for both.
#2 Create a list of tradespeople to help when things break – because they will. Hire a reliable handyman to help tenants. Hire a reputable accountant to help with your expenses. Partner with a great real estate agent who understands your real estate goals and can help you find qualified tenants.
#3 Be prepared to get your hands dirty. Hiring out is possible but will also eat into your profit margin. Figure out what you are able/willing to do and be prepared to pay the pros the rest. Life is about balance – so is the workload and expenses.
#4 Maintenance is very important. If you keep up on things (ie cleaning eaves, maintaining sump pumps etc), you could save yourself thousands of dollars and many hours. Keep up on the keep up.
#5 You need to have the right personality to screen, chose and maintain relationships with tenants. Not everyone is comfortable or interested in this. If you’re not one of them, perhaps seek out a partner or a property management company. Knowing your strengths and weaknesses going in is essential.
#6 The cheapest property on the market is not always the best one. The area and type of property are going to attract a certain type of tenant. It is better to work backward and decide on the type of tenant you would like and then search for properties in the area.
#7 A+ buildings in A+ areas = A+ rents with A+ tenants. Decide which grade fits your portfolio. You are never too young or too old to begin building your real estate portfolio. There is no age limit – upper or lower, just get started.
#8 You need your tenant just as much as they need you. Getting off your high horse as an all-mighty landlord before you get started is an investment in your journey. Be kind and courteous. A good relationship with your tenants can make the world of difference. Respect breeds respect.
#9 If you don’t have a down payment to build your portfolio, get creative. Maybe it’s time to partner up, maybe you hit up a family member for a loan, maybe you leverage your home. Arming yourself with the right team of professionals (real estate agents, mortgage brokers, accountants etc) who are adept in this arena could be the difference between getting started now or sitting on the sidelines while you stash away every penny.
#10 Knowledge is power and in the wild and crazy world of a real estate investment, this couldn’t be truer. Learn everything you possibly can about your rights and responsibilities as a landlord, about higher mortgage rates for rental properties, about simple maintenance repairs and about local bylaw rules and regulations. The more you know, the fewer rules you are going to break.
If this is something you are seriously considering, please do not hesitate to reach out to me. I'd be happy to have a more in-depth conversation about any or all of these points.
At Knowledge Broker, our goal is to create an open-source of information for all our clients. At the end of the day, they get exactly what they want and what they need. If you know someone who could use our help or services, please give them our details using the contact information below.
JOSHUA CAMPBELL (@knowledgebrkr)
Real Estate Broker
Coldwell Banker The Real Estate Centre, Brokerage
249 Avenue Road • Newmarket, ON L3Y 1N8