Living in Toronto, the subject of real estate comes up often. The conversation often turns to investing—and how renting out an income property can provide impressive returns. While it’s an enticing idea, there are a few things you should be aware of if you want to do it right.
If you’re thinking of getting started with real estate investing, here are five things you should know…
1) Flipping is hard work
First things first: if you’re thinking of flipping homes, you should know that it’s not easy. While the reality shows might make it seem totally doable, performing an extensive property overhaul and reselling at a profit is no easy feat. It requires market expertise, a sizeable budget, relationships with reputable contractors, and impeccable project-management abilities.
If that sounds like a lot to handle, renting out an income property may be a simpler and lower-risk option (albeit one that still requires careful planning).
2) Location matters…a lot
Location, location, location. It’s a well-known saying for a reason. Choosing the right area is especially important when you’re purchasing an income property. You want to ensure that the home you pick appeals to as many potential tenants as possible. The key is to identify in-demand and up-and-coming neighbourhoods.
Next, it’s time to think about your most-likely renters. Whether it’s a three-bedroom house on a tree-lined street or a modern condo in a lively district, consider who will be interested in your property—and tailor your marketing accordingly.
3) Crunching the numbers is key
Before you commit to investing in a property, you’ll want to make sure it can help you meet your financial goals. Each month, will the income you derive from it be higher than the associated expenses? If so, it’s considered to be a cash-flow positive property. To determine whether a house or unit fits that criteria, you’ll need to get a sense of the rent you can reasonably charge. Look at the rents for comparable properties nearby, and talk to local landlords if possible.
It’s worth noting that cash-flow negative properties aren’t always bad investments. The right financial expert can help you understand your options.
4) Know your constraints
Do you have the time, energy, and expertise to be a great landlord? Are you financially-equipped to take on the risk? To reap the benefits of your new role, you’ll want to treat it like a business. That means assessing the tasks you’ll be responsible for—and your finances. It means budgeting carefully, and knowing whether you’ll need help with your day-to-day.
In addition to making sure you have the necessary funds, you may want to consider working with a property manager if need be. A professional can provide peace of mind by ensuring everything gets done.
5) Your best resource is a local agent
Investing in real estate may seem complicated, but finding the right property shouldn’t be. Whether you’re scouring the local market or securing the ideal unit for a great price, a true professional can ensure that the process is as seamless and low-hassle as possible. They can also help you prepare and market it for your ideal tenant.
If you’re interested in finding a property that matches your budget and goals, getting in touch with an expert is the first step!
Looking to find an investment property in West Toronto? We know the area inside and out, and we’d love to help! Get in touch to learn what’s available.