7 Tips Before You Buy Rental Property

February 25, 2019 Sam

Now that you have decided to become a landlord, it’s time to do some homework so that you start off on the right foot. As they say, “Well begun is half done” Becoming a successful landlord involves a series of steps, each of which needs to be meticulously planned. Right from choosing the right property to financing the right tenant for your rental property, learning the rules of tenancy and then finally, creating a tenancy agreement, There is a lot that you will need to do to ensure success as a landlord. You will have to do a lot of research and learning before you can put up your house or apartment for rent. 

1.  Choose the right property

This is probably the most important decision you make that can have huge impact on your future outcome. As a potential landlord, your choice of property can make all the difference between a profitable and a loss-making rental business. The right property could give you a steady stream of tenants and a good rental income, whereas a poor choice could leave you struggling with the accounts with huge mortgage to pay off your pocket. While there is no one strategy that works for all landlords and all locations, that ever rental property type you decide eventually make sure that is backed up per your strategy. Many landlords like to invest in to rental property apartments and condos, while others prefer a single family homes or houses for rent to implement their thought out strategy. 

2.  Do your research

It is extremely important to spend some time learning about how to choose locations and rental properties, value them and evaluate the specific rental market you are in. Remember, the success of your rental business depends on your due diligence and buying the right property in the right location. These are the key decision points. Try to learn about what attracts tenants, what makes them move in or move out and how the rental market looks in the long run in context of your desired rental property location, budget as well as property type. 

3.  Find the Right Location

When looking for the right rental property, consider an area with plenty of amenities such as malls, restaurants, parks and schools, low property taxes, growing job market, and low crime rates. It is not necessary to look for a property in the most posh neighbourhood of the city. In fact, neighborhoods with solid working class often make a great choice that yield consistently great returns on your investment dollars. Also no matter how good the neighborhood is, tenants will not want the house for rent that is not ready and prepared for renting. So, don't choose a rental property that looks visibly needing ton of upfront investment to bring it to rental condition, off course unless you got it at steep market discount.

4.  Buy at the right price

As Buying at the right price now will not only ensure steady income over time, it will also help withstand future fluctuations in property value.  A good starting point is to benchmark rental prices for similar units in the area and then weigh it against the mortgage, taxes, and utilities you will be paying. You need to have enough margins to pay all expenses and still have some profit left. Once you have calculated this margin, you can analyze every property against this amount. Higher the margin, the better it is. 

Any discount that you may get at this stage can make a huge difference to your ROI. So, try to get as much a bargain as you can. You may be tempted to buy a much cheaper house that needs maintenance thinking that you will get the repairs and renovation done. However, never do this unless you are sure that the effort and investment is worth it. Remember, repair and maintenance can turn out very expensive and the costs may eat into every penny you have saved in the first place. 

----------------------------------------------------------------------

You May Also Like:

So You Want To Be A Landlord?

6 Tips For First-Time Landlords To Succeed In 2019!

9 tips on preparing your rental property for a new tenant

----------------------------------------------------------------------

5.  Assess local rental regulations

Rental properties are required to meet a set of regulations set forth by local authorities. These regulations may vary across cities and provinces.  Make sure the property you are eyeing complies with the rental requirements. Look for any potential safety and maintenance issues. In major Canadian cities such as Calgary you do need special permit and ensure compliance with specific bylawas if you want to rent out basement suites. If rental property you bought has a basement but does not comply to the required bylaws, you can expect to spend great deal of money to bring the property in compliance before you can rent out the basement suite.

Also don't overlook consulting a property inspector before purchase the rental property to ensure all major hidden issues are known and considered prior to the property purchases. You don't want to be in a situation where you bought the property based on it's visible condition and cosmetic looks only to find out that you need to get the foundation, plumbing or electrical system redone later. Those expenses could eat up all your yearly rental income of your house for rent in some cases!

6.  Look for a house with simple construction

Choose a property with design and construction that is likely to appeal to most people, particularly the ones you are looking house to rent to. If the design is too fancy or jazzy, it may not appeal to a lot of people the reason is simple, most people like homes where they can see themselves with something with neutral shades and simple designs. Do not let your own personal preferences affect your choice. The more customized design and colors you rental property has, lesser it's chances to get tenants who can picture themselves in the home to rent it faster. Look for something that everyone will like. So, simple the construction the better it is. It gives the tenants a chance to style the house the way they like.  . So, simple the construction the better it is. It gives the tenants a chance to style the house the way they like. 

7.  Look for something closer to home

It is easier to manage your rental property if it is closer to your place of residence. If you live to far away, you may not be able to resolve issues quickly or even keep an eye.  There is no one-size-fits-all strategy that can help you find a great rental investment, but there are steps you can take to ensure that you make a sound investment. Basically, it’s about doing a lot of research and evaluating properties from all angles before making a choice. 

In conclusion, there is no doubt that being a landlord can be an exciting and rewarding endeavor. If you keep these five things in mind, your renting journey will most likely be a pleasant one. Remember your property and income are at stake, so take care of your investment and enjoy the ride!

----------------------------------------------------------------------------------------------------------------------------

Are you a landlord with house rental or apartment for rent in Calgary, Edmonton or anywhere in Alberta looking for good tenants? Or you are a renter whose apartment search seems like an unending task? Choose RentWell.ca, the best rental websites to put an end to all your rental woes! Try it is simple, safe and also free!


Sam

Sam is passionate about real estate and frequently writes in online industry magazines columns. The views expressed are her own.