In the real estate industry, there’s more than one way to build a successful business without having to sell properties, aka being a real estate agent.
Instead, those who are interested in this career path could consider buying rental property. These are entrepreneurs who find and buy property, either fix it up and sell it, or collect rent from tenants. Lessors have the potential to make a nice profit, but it’s not a career for everyone. You need to have a deep understanding of the market, know how to appeal to tenants and have the determination to turn your visions into reality.
Understand that, before purchasing any property, there are a few things to look out for.
Here’s a guide to help you get started.
The first thing you need to do before buying property is complete your research. Research factors like the location, what rent typically costs in that area, what operating expenses will incur, etc. Simply examining a building carefully, although this helps, does not ensure success. Anthony Liscio of Alto Properties in Toronto says you should learn about several factors, like how the population has changed in the neighborhood, the available number of schools and households, crime rate, and more.
“Today’s tenants want to live in a place that is in close proximity to good schools, local take out spots, coffee shops and green spaces. You need to consider these kinds of amenities before purchasing a property,” adds Alto’s Anthony Liscio.
Locate a growing market
If you buy a property in an underdeveloped area, chances are it will be difficult to attract tenants. However, if you set your sights on properties in developed locales, the decision should ensure an advantage. The main goal is to make at least a decent profit each month after taking care of operating costs.
Avoid a Fixer-Upper
Unless you’re skilled at construction work, you’ll want to avoid buying a fixer-upper, especially if it’s your first property. Why? Because you will likely end up paying too much to make renovations and repairs. Instead, look for a home that is priced below the market and needs only minor repairs.
Hire a property manager
The first challenge in owning property is finding a reputable property manager that you can trust with your investment. Some enlist the expertise of a skilled family member to take on this important duty. For others who have enough funds to do so, it can be beneficial to hire a property manager to help you examine potential buildings before singing on the dotted line.
A property manager takes a lot of the legwork away from you. This person can take care of rent transactions, finding tenants and lessening some of the day-to-day operating tasks so you don’t get overburdened.
Buy what you can afford
Know your limits. While it would be great to buy property in an upscale neighborhood, you should be fully aware of how much you can afford to buy. Remember to factor in added costs, such as roof repairs and any unforeseen situations that could arise. Always calculate the amount you can invest in buying a property and then think about other prospects.
Investing in rental property can be an exciting process and one that can generate income over the long term. Just make sure to do your research, follow your instincts and employ some of the aforementioned methods. Good luck!