Rental properties are often a very good investment. Owning a rental property can often pay for itself and earn extra household income. Before you jump into the landlord market though, there are some significant points you should consider.
- Are you familiar with the Landlord laws and regulations in Canada? Are you familiar with Tenants Rights?
- What are the taxes and fees in your area associated with owning a rental property? How will you handle the payment of these taxes?
- Mortgages on rental properties are often considered to be “risky”. As the home you are renting is not your own primary residence, the interest rates can be higher and the loan more complicated to qualify for. It is not impossible to do, but the financing will need to be creative at times.
- You should always purchase an inexpensive home as your rental property. It is never advisable to spend too much money on a rental home. You never know what the housing market will look like in even 5 years; it is better to play it safe.
- Will the rental home you purchase need renovations? Can you afford those renovations? You will need an adequate amount of starting capitol to purchase the home and make the necessary remodels before renting.
- Who will handle maintenance issues on your rental property? Are you qualified and prepared to do this yourself or will you need to hire a third party?
- It is always wise to purchase a rental property that is close to your own home, or at least within a reasonable distance. Absentee Landlord's often have the most difficult time with tenants and maintenance.
- Never assume that your rental property will always have a tenant. Are you prepared for your property to sit vacant for long periods of time?
- What neighborhood is your rental property located in? Is the neighborhood safe and desirable? Look into what schools are nearby, as well as public transportation options.
- Make sure your rental property offers parking for your tenants. Also consider the cost of parking in the metropolitan areas.
- Will you provide the utilities for your tenants or will gas and water be their responsibility? If you are going to handle the accounts for utilities, be prepared that there are strict rules for payments on these services.
- How will you find your tenants? Anyone who has ever served as a landlord can tell you that there are both good and bad tenants. Even if you have your tenant prospects jump through rigorous hoops to prove their qualifications, you can still end up with renters who do not pay. Make sure you know the laws in your area for evictions, and what your rights are for collecting rent payments.
As you can see, deciding to own a rental property is not as cut and dry as it may seem. With due diligence, you can have a very successful rental property that brings in additional income for your family. Research and double check through all of the points above, and you will be well on your way to a lucrative investment. And don't forget to call Craig to get the mortgage on that rental property......