By: Joshua Campbell
Tips For Buying Your First Rental Property
Tags: real estate, real estate agent, knowledge broker, homes in toronto, rental properties, buying your first rental, first time landlord, landlord laws
You have probably heard many times that real estate is a secure and prosperous opportunity to make an income. This is true but only when you understand every element of investing in real estate. Especially understanding the risks that can come with it. So, before diving in, here are 5 things to consider before buying your first rental property.
There are multiple different avenues you can go down for investing in a rental property, for example, student housing, commercial units, condos or housing. You need to find a real estate agent that you can work closely with and who understands your goals and ambitions. It’s important that the two of you have solid communication as this could be the person that helps you find your next investment opportunity.
- Find An Agent Who Speaks Your Language
Being a landlord isn’t just taking money from people every month. You are responsible for the maintenance and well-being of your property. That being said you may need to break out a toolbox from time to time or have a maintenance person on call for when your tenants need help. You will also need to be well versed in the rights of tenant laws. It might be beneficial to connect with a landlord and tenant lawyer who can help you understand your rights.
- Consider If You Are Landlord Material
Before you purchase a second property it is important that you pay off your existing debt. You do not want to find yourself in a position that you are unable to pay off your existing debt while caring the overhead of a new investment. You will also need to gather a larger down payment than your owner-occupied property. You will need at least 20%. It might be also wise to look into landlord insurance that protects you against property damage, lost rental income, and liability protection.
- Get Your Finances In Order
This directly relates to working with a real estate agent who understands your goals. The location makes the biggest impact when investing in real estate. You want to make sure your real estate agent is providing you with up to date market reports of the area and the nearby amenities. Consider the type of tenants you want as well before you settle down in a certain spot. If you want student rentals make sure your property is close to campus. If you want summer cottage rentals make sure you are on a lake.
- Pick The Right Location
- Know The Pros and Cons
- You can still maintain your current job while earning money on your investment property.
- You will earn money from your real estate investment as well as rent
- In a crisis, real estate is more stable than the stock market
- If you put more into your investment you will get more out
- Tenants can be painful and unpredictable at times
- The upfront cost of purchasing a second property might be more than you anticipated
- Monthly rent might not cover your mortgage payments for your second property
- If the market-place turns you can’t sell you property quickly
- Until you find a tenant you have to pay for all the monthly expenses
At the end of the day, it is important that you align yourself with partners who want to help you succeed. Connect with us here to see how Knowledge Broker can help put you on the right path for your dream investment.
At Knowledge Broker, our goal is to create an open-source of information for all our clients. We want to ensure that, 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 put them in touch with us or send us their details using the contact information below. And before you go, click here to take the Knowledge Broker Quiz and see exactly what we can do for you!
JOSHUA CAMPBELL (@knowledgebrkr)
Real Estate Broker
Coldwell Banker The Real Estate Centre, Brokerage
249 Avenue Road • Newmarket, ON L3Y 1N8