Buying an investment property requires a significant investment of time and money, which is why when you invest, you want to choose correctly and set yourself up for future success.
Your purchase decision should come with plenty of research and professional advice. After all, each property is affected by a variety of factors that, together, will either optimize or hinder your returns.
Before you invest your time and money into a rental property, consider the essential steps you will want to take, like renovations and upgrades, and factors you will want to consider to help you choose the right investment property.
Make A Data-Based Choice
When working with a realtor, you will often get subjective opinions and guidance based on past experiences and a few recent transactions to consider property values. To pick a property that truly optimizes your ROI, your decision must be based on different, relevant, and comprehensive data sets that allow you to compare, analyze and project for investment returns based on different property elements.
While your local realtor may have some helpful information, don’t make any decisions without having the hard data. You can greatly benefit from using a platform that utilizes data and investment-oriented algorithms to present all the vital information in one place.
Konfidis, for one, is a real estate investment platform that uses big data, strategic investment algorithms, and a team of advisors to identify property listings that will outperform the market by outlining all the factors that contribute to these returns. It marries the latest prediction algorithms with real estate investment experts providing end-to-end, data-driven insights that users can leverage to make educated investment decisions.
Choose A Low Maintenance Property
While that elegant property with a classic Victorian-style house may be impressive, an older property can be costly and aggravating to get up to modern building codes. Ideally, you want an investment property that will need only minor repairs or upgrades, if any at all.
Consider enlisting the help of a professional who can vet a property to identify if it will require more work in the long run than you are willing to do.
Choose The Right Neighbourhood
Choosing the right neighborhood is also imperative for getting the most out of your investment dollars. It’s a delicate balance between choosing a home you can charge the most rent for or sell for the highest listing price and not overpaying or buying at the peak of a home’s market value.
Some red flags to look out for would include if the prices in a neighborhood suddenly spike or if rental prices in the area aren’t much more than you would pay on the mortgage.
Find The Right Tenants
Choosing the right neighborhood makes finding the right tenants easier, but it doesn’t guarantee good tenants. Vetting potential tenants is crucial for protecting your investment and income capital.
At the very least, tenant screening must involve credit, employment, and reference checks, preferably from former landlords. You may even consider asking for a criminal background check.
With that said, you can’t refuse to rent to someone just because they’re on public assistance. It’s a prohibited ground and considered discrimination by The Ontario Human Rights Commission. Get familiar with the other prohibited grounds before you begin the tenant screening process or risk a potentially embarrassing and expensive hearing.
Once you’ve done the work and found the right tenants, keeping them around for as long as possible cuts your investment costs and ensures a steady source of income. Keeping tenants happy means providing quality housing on an ongoing basis.
Property Manage Like A Pro
The key to property maintenance is in the name. It’s easier to maintain a property than it is to fix it. Appliances and essential systems like HVAC and electrical rarely go down overnight. Even easy fixes around the house can lead to costly repairs if they aren’t taken care of quickly.
For example, replacing a window crank handle that isn’t turning properly is much easier than removing the screen and replacing the entire operating hardware because the gear teeth are stripped – especially during Canadian winters.
The same holds true for collecting rent. Ensuring a tenant doesn’t fall too far behind on rent is critical in preventing you from covering rent out of your own pocket or the aggravation and costs of having to go to the Landlord Tenant Board for the proper remedy.
Proactive property care can be a full-time job if your real estate investment is a side hustle, crunch numbers that include the value of your time, and consider retaining a property management firm. In the long run, it might make more fiscal sense to offload the time, effort, and expense to an actual property management professional. You may even find one that screens tenants for you.