Tips on How to Find a Profitable Investment Property
Are you ready to start the search for an investment property? Real estate is a popular choice among investors, and for good reason. Steady income, financial security, and strong appreciation are just a few of the benefits of investing. But how do you spot a property with potential?
Whether you opt for a stylish condo or a family-friendly house is up to you, but there are a few things every real estate investor should keep in mind. If you’re ready to find the ideal investment property, here’s how to do it right…
Narrow down your neighbourhoods
Location is one of the most important things to consider once you’re ready to invest. Choose the right neighbourhood, and you’ll likely have qualified buyers lined up to call your property home. Opt for one that’s not-so-popular or starting to decline, and you may have difficulty finding renters—or getting the return you were expecting.
It’s easy enough to anticipate demand in a popular, well-established area. But if you’re looking for an up-and-coming community, there are a few things to watch for. When trendy boutiques and buzz-worthy restaurants are starting to move in, it’s usually a sign that a neighbourhood is on the rise. Future condo development is also a strong indicator that you’re on the right track.
Imagine your future tenants
When you’re considering an investment property, try to picture the tenant who might apply to live there. Students, growing families, empty nesters—they all have unique housing needs. By anticipating them, you can help ensure that the property you choose will be in-demand.
The area you select will play a role in the type of renters you’ll attract. While a quiet, well-established neighbourhood may be perfect for tenants who are raising kids, a sleek downtown condo may be more appropriate for young professionals. You’ll also want to consider square footage, storage, outdoor space, and (when applicable) building amenities.
Analyze the numbers
When you’re considering an investment property, you’ll want to determine whether it’s cash-flow positive (which means the rent you charge will be higher than your monthly expenses). Of course, a property doesn’t have to meet this criteria to be a good investment. That said, there’s a good chance you’re looking for steady monthly income—which is why it pays to do the math.
The first step is figuring out how much you can reasonably expect to receive in rent. Begin by looking at similar properties in the immediate area. How much are other landlords charging? If you can, try to talk to local investors to get a sense of what’s working for them.
Next up, tally the probable monthly expenses. These range from property taxes and insurance to ongoing repair and maintenance costs. Remember that for a condo, you’ll be paying a monthly fee to have the bulk of your upkeep done for you.
Know whether you need help
Are you willing to respond immediately to calls, texts, and emails from your tenants when something breaks? Do you have enough money saved up to cover any emergencies that may arise? Being a landlord means knowing your responsibilities under the Residential Tenancies Act—and being prepared to meet them!
Balancing your duties as a landlord with day-to-day life can be a challenge, but a qualified property manager can help reduce your stress. If you go this route, look for someone with great references, and ask plenty of questions during the interview process.
Don’t skimp on research
If there’s one thing you should remember during your search, it’s that you have to do your research. From an income property’s rental history to any new development that will occur nearby, learn as much as you can. The more information you have about a condo, house, or semi-detached home, the better positioned you’ll be to rent it out profitably.
Of course, the search process can be complicated. The good news is, you don’t have to do it on your own. To start the process off right, speak to a local agent with income property expertise!
Thinking about investing in real estate in the near future? Reach out to learn what’s happening in the market—and what it means for you.