Tips on Buying Your First Rental Property

The real estate market in 2021 has been hot, and right when real estate buyers thought that the market would slow down, the exact opposite happened. The demand for new housing has continued to stay at an all-time high and has been filled by a solid economic base that draws in more workers and their families towards city life.

If you seek to buy a rental property, you might be wondering the best way to go about it. Before you leap investing in this kind of property, you must know everything there is to know before you jump in. Generally, the real estate market tends to be unpredictable. But when you add a global pandemic to the mix, many companies offer their employees working from home opportunities; there is no way to predict the next step for the real estate market.

There are, however, a few things you need to consider before you invest in your very first rental property.

Do You See Yourself as a Landlord?

Suppose you have purchased a rental property as an investment and have rented it out, which automatically makes you a landlord. You need to ask yourself if you have spoken with a property management company. Yes, being a landlord can indeed earn you a lot of extra income, but don’t let it fool you into thinking that there’s not a lot of work that goes into it–in your spare time to be specific.

Tenants may call you in the middle of the night for minor property repairs that you will have to do out of your pocket. If you’re not ready for this kind of commitment and are not the handy type, then you might not be cut out for this kind of role.

Increased Down Payment

The average down payment for a property in Canada is 20% if the property that is listed is for more than $500,000. However, if you would like to make money on your investment, suppose you want to rent it out; the more money you put on as your down payment, the better it is for you. If you can afford it, try putting a 25% down payment to make back more money through equity in the first year.

Up and Coming Neighborhoods

If you would like to maximize your profits from your rental property, one way to do so is to check out up-and-coming neighbourhoods in the city. Suppose you invest in a property in an area that is not as desirable as others, but the prices in that area are lower than in other areas. In that case, it is possible that you can maximize your profits as the neighbourhood will continue to develop and gain gentrification.