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Two Things to Consider when Investing in Properties

Buying an investment property isn’t for everyone. It takes a solid understanding and control over your finances to maintain numerous properties at once. It’s imperative that, before buying an investment property, you know you can afford it even if it takes time to find renters or you have a couple months between tenants. Once you know that you can afford it and have done the bookwork and decided property investing is for you, here are the next few things to consider.

Where do You Buy? This can be a tough decision. Do you buy an investment property in the city you live in? In another town in the same province? A different province? A different country?!

For a real estate investor, one of the most important characteristics of a city or town is the vacancy rate. Vacancy is one of the highest expenses an investor can have to swallow, so it’s important to pick a city (or town) with a low vacancy rate. That will nearly guarantee that someone is looking to rent and that their choices may be limited. Properties in these areas will likely be more expensive, but you’ll also likely be able to charge slightly higher rent payments.

It’s also useful to remember that you’ll have the best financing options when buying a home for personal occupancy. If you can move into the property you’re purchasing for a couple years, you’ll lower your expenses and quickly learn what needs to be renovated and fixed before renting it out.

What Kind of Property do You Buy? Whenever you’re thinking of purchasing real estate, you’ll likely hear the words: location, location, location repeated at you so often you’ll wonder if you’re going mad. However, when it comes to your investment property, location might actually be even more important than it is for your principal residence.

This is because you’re not just buying for your needs: you’re purchasing a property that needs to be able to fulfill everyone and anyone’s needs. That means everything from good schools (for those with kids) to proximity to transit (for car-less young professionals) and nearby shopping (stay-at-home parents) to crime-rate (nobody wants to live near a crime hub) could make the difference.

Another useful thing to consider is that a well-maintained but average home will often earn better income than an expensive, luxury property. Fixer-uppers should also be avoided since they can take a large investment in both time and renovation costs before earning any income.

Homeownership and investing in properties comes with a lot of benefits, but they also have costs. You’ll likely spend $1000-$2000 on taxes, insurance, and maintenance. Bad tenants can bring damages and legal costs, and you need to be able to afford the property even if it ends up sitting empty for a month or two. If you’re interesting in investing in real-estate, a skilled realtor can help you make the decisions that will help you find renters later. Have questions about investment properties? Call me today at (403) 660-5319.