After much searching and many home visits, we finally found a duplex we loved, so we bought it and moved in. Personally, I’ve long been a believer of the F.I.R.E movement—the acronym that means “financial independence, retire early”. Real estate investments are one way to gain financial independence, so I intend to pursue these types of projects for the next while. Based on my experience with this initial purchase and my extensive research on the subject, I’ve come up with a list of criteria I consider when it comes to purchasing a rental property.

1- Rentability

First and foremost, it’s important to calculate a rental property’s profitability. On one side of the coin, there are all the associated costs to consider, such as the mortgage, taxes, insurance, and any potential maintenance costs. On the other hand, there’s the total monthly rent you expect to receive. Most of this information is made available on the property’s sales sheet. Ideally, your income should be higher than or equal to your expenses for the investment to make sense. Otherwise, you can think about implementing different strategies to increase a property’s profitability in the years following its purchase.

2- State of premises

Another very important piece of the puzzle is the property’s location. Since I wouldn’t consider myself to be an expert on renovating, I tend to prefer a building with good bones—a solid foundation that doesn’t require too much work. As soon as I see the photos on the building’s sales sheet or when I visit it in person, I inspect its structure and closely look at everything from its roof, foundation, windows, ceilings, and just about everything else. Then, I look at the space’s overall style and decide whether it can be rented as is or needs a bit of a makeover.

3- The neighbourhood

Next, I’ll look at the neighbourhood in which the building is located. Typically, I do this using Google Maps. This is an excellent way to get a sense of the cost of living in the area, if the residence is on a busy street, what shape neighbouring buildings are in, the residence’s proximity to businesses, etc. Choosing a good neighbourhood gives me peace of mind in the short term and can potentially impact the property’s future value. Depending on your investment objectives, selecting a community where the price of buildings is less expensive could be very profitable over time.

4- Parking

I always look into parking options too. Parking is a big draw for many tenants—I’ve previously had prospective renters express interest in a unit who then decide to look elsewhere simply because the property didn’t have adequate space for a car. Besides that, it’s one less worry for them during winters when snow removal operations are in effect. But, keep in mind, parking is a need that varies from city to city.

5- Maintenance

Finally, it’s important to look into how much maintenance will be required overall. For example, wood railings and steps will require painting more regularly than fibreglass or aluminum. Landscaping is also something to keep in mind! Drawing up a list of the tasks to be done annually on a building according to its siding and landscaping allows you to have a clear picture of the situation and avoid surprises.

In conclusion, buying a rental property can be a science. With these five criteria guiding my decision, I know I’m making a sound decision. Keep in mind they may vary depending on the type of project and if it’s a short, medium, or long-term investment. Purchasing a rental property can vary from one city to another. Remember, with time and experience; you’ll come up with your list of criteria to settle on the ideal property!

Source: moncoindevie.com