Are you ready to begin the great adventure that is the purchase of an income property? Be well prepared with these few following prudent tips.
Owning an income property has several advantages. The financial return is the most compelling. Usually, the revenue generated by the rents is sufficient to cover the mortgage payments and other maintenance costs. Moreover, one can take advantage of certain taxes benefits. However, being a landlord is not all positive. There is the stress caused by the loss of revenue when a unit is unoccupied. It is best to be prepared for all eventualities. Here are ten tips from the experts.

1- Look Over the Bills

Long before visiting the notary, make sure that you have analyzed the building’s various expenses. Insist on seeing all accounts for the past two previous years. This will avoid any unpleasant surprises and ensure that the building’s service fees won’t eat up your revenues.

2- Obtain Estimates of Renovation Costs

A building as recently constructed as 10 years ago may require major or minor renovations. It is always important to have the place inspected by a certified expert. You can also ask two or three contractors to submit estimates on the costs of renovations and when they will be needed, both short-term and long-term. Then check your numbers to evaluate if this purchase is profitable.

3- Don’t Exclusively Rely on Your Talents

Being an income property owner can be demanding. Are you handy and think that you will be able to make the most of your skills by carrying out the renovations yourself? This can be a cost-effective choice, but don’t forget that some repairs, to be legal, must be undertaken by a licensed professional, such as any work related to electricity or natural gas. And this can be expensive.

4- Be Prepared to Deal With All Sorts of People

If we don’t get to pick our family members, we certainly don’t get to choose our tenants’ personalities. Some only show their true face after having signed the lease: bounced cheques, damage to the unit, disrespectful attitude. Some people are real pieces of work. Before buying an income property, think carefully about your own temperament. How would you respond to such behaviour? Would it make you miserable or could you let it go? Your own well-being is the priority!

5- Choose a Building near Your Own Residence

If you don’t intend to live in one of the building’s apartments, it is important that you select a property located in your home’s vicinity. We sometimes underestimate how often we will have to go visit our building. If possible, you should avoid a location that requires driving on busy streets. Nobody likes to be stuck in traffic!

6- Think of the Future

Is the building for sale that you are considering going to increase in value over the next few years? Certain changes to the environment may impact its value, such as the construction of a convenient road or of a noisy airport. Get all the facts.

7- Rent the Units at a Fair Price

Many factors can influence a unit’s rental fee, like location, style, the number of rooms or the quality of the building materials. On the one hand, if the rent is too high, you may discourage perfectly good tenants or, even worse, experience a loss of revenue by having it remain empty. On the other, if the rent is too low you will needlessly lose money.

8- Be Ready to be Called at All Hours

Managing an income property is a 24-7 job! Tenants have the right to get in touch with you anytime they have a problem with the unit. Could you handle this eventuality? You could also hire someone trustworthy to take care of such issues (if your budget allows!).

9- Don’t Wait too Long

The best time to purchase an income property is now! It is rarely advantageous to wait for mortgage interest rates to go down or to have saved up a bigger down payment. In fact, if you find a good deal, jump on it. You always win when you invest in real estate.

10- Work with a Broker

Our last bit of advice is to work in collaboration with a real estate professional. They will assist you in uncovering a hidden gem and in evaluating the pros and cons of the properties you visit. Some have specialized in income properties. Don’t hesitate to use their services!

We hope you find your ideal building and that your search will be crowned with success!


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