3 Things You Have to Know About Investment Properties
Rental or investment properties can be both enticing and terrifying to consider whether you have or haven't already been in the market. The CMHC 2015 Rental Market report shows that vacancy rates increased from 1.4% October 2014 to 5.3% October 2015. News headlines and doomsday reporters will try to emphasize this increase in vacant rental properties as though investing in the real estate market is a bad choice.
I would like to propose something different.
Investment properties are just that; an investment. They are big-ticket rewards over the long haul, and one year of statistical differences like the one witnessed over the last year shouldn’t frighten those of you looking to invest.
What we should do is get you prepared before the investment, so that you are not surprised along the way. Here are some things to keep in mind when considering an investment property, though I’d like you to give me a call so we can find solutions specific to your investment dreams.
1. DOWN PAYMENT REQUIREMENTS
Generally speaking, investment properties require a 20% down payment. While this might not be news to you, it might be a big number. I encourage you to take a look at the Budget for Savings post, and make sure you’re on track with your savings goals. Call me to see if there is any way to minimize interest on your current debt payments to maximize the money you save.
If 20% down is too much to handle in the foreseeable future, don’t lose hope! Keep reading to find alternative ways to get into the investment market.
2. LET'S GET DOWN TO BUSINESS
Consider your investment property just as you would treat any other business. You aren’t just buying a property; you’re creating income for yourself. It will take effort, but investing by having a good business tax manager and sitting down with other investment property gurus is just the beginning to starting well in rental properties.
3. GET PICKY & BE PATIENT
Patience is a virtue, especially while finding the right tenants! The market can flip between a renters market, and an owners market, but either way you should be particular about your tenants. Read renter applications thoroughly, take your face-to-face meetings with them seriously, and call their references. This seems only logical, but there are far too many owners who skip a step, and pay for it in the end. Better to have an empty rental property than a troublesome property.
OTHER THINGS TO KNOW
If it seems impossible at this time to invest in a rental property, but you’re itching to get into the market, consider using your primary residence as a start! A primary residence with a legal suite is typically 5% down, and is a great starting point.
Rental properties are also a great way to avoid penalties in breaking your current mortgage if you’re planning to invest in a different primary residence.
As you can see, the pros of investing in rental properties will always outweigh the potential hiccups along the way. Although it can be intimidating, it is not impossible to make your investment dreams work for you with a great payoff in the end. Call me, and we’ll get you on the way.
