What to Look for in an Investment Property
Posted by Garman Group on
Being able to acquire an investment property in the Victoria housing market is great if you can afford it. Buying a second property, however, is a bit different than buying a first home. So, here’s your handy checklist of things to keep in mind before you dive into the housing market again.
Can You Really Afford It?
In case you weren’t aware, there are actually different rules for buying a second property than there are for getting into the housing market the first time. Talk with your mortgage lender, financial institution, and real estate lawyer to make sure you qualify for an investment property before going any further.
Is It Worth It?
Before you invest in something that'll make you money – figure out if it will, in fact, make you money. Add up your mortgage and insurance costs along with maintenance fees and other costs which come with owning a home, and figure out if the amount of rent(s) you will receive will exceed your costs. Your qualified MLS REALTOR® should be able to help you with calculations on how to figure this out.
Learn The Rules Of Being A Landlord
If you want to benefit from having an investment property but don’t want to do a lot of work, consider hiring a reputable property management firm. They'll deal with almost everything to do with the property leaving you more free time. They can often come with a hefty fee though, so keep that in mind.
Different provinces have slightly different rules for tenancy and landlord agreements, so don’t listen to your cousin who lives in Ontario about the rental rules if you own in the B.C. housing market. Renters have rights and you as a landlord need to know them and adhere to them.
It’s also important to consult with a lawyer to draw up rental agreements to protect you — and them.
Know Your Neighbourhoods
Try not to buy a second property in a housing market you're unfamiliar with. When renting it out, you want to be able to answer questions your potential renters ask about the area. If it’s not a neighbourhood you live in or spend a lot of time in, see if any of your friends can give you insight.
This is also something your qualified REALTOR® can help you out with. We know where the current popular housing markets for families, as well as couples and singles, are and can help you find an investment property in one of these areas.
Location, Location, Location!
In addition to being in a good neighbourhood, renters are often looking at which amenities are nearby. Living close to a bus route is popular with families and those who commute into town. Parks, schools, recreation, shopping, coffee shops — these are just a few other things people like to live nearby. Investing in a property which is miles away from anything may limit your rental options.
Even if you have potential tenants in mind who don’t require living near a bus route, remember that renters often turn into owners and will, therefore, move on in a few years. That leaves you in the position of finding new tenants, most of who will likely want certain amenities.