Making the jump into the world of real estate investing is something that takes time and patience. Making the wrong decision can cost you dearly, and might see you get stuck with a property you aren’t prepared to handle. In order to avoid things like unexpected costs, major renovations, or just plain bad luck, take the following into consideration.
Only fools rush in
Due to the nature of real estate investing, the last thing you’ll want to do is rush into buying a Toronto or GTA property that doesn’t fit your needs. It’s important to shop around and view a variety of properties and locations in order to be able to choose the right fit for your investment.
In order to make an educated decision on how and where to spend your hard-earned money, you’ll want to do things like make sure the location is the right fit for your property – students will want to be want to be close to schools or public transportation, families want to be close to amenities and away from loud or busy areas, young professionals want to be closer to work or highways to ensure easy commuting, etc. Choosing the wrong property location will turn off potential tenants, and situating the tenants in the wrong areas may also present future complications. Highgate Property Investments has extensive experience in matching real estate investors with the right properties, and we’ll be able to tell you if something will work or not for the type of tenants you want to attract.
Other things to take in mind include the extent of potential repairs and renovations that will have to take place before you can move tenants in, whether to invest alone or with a partner, and ensuring that you have the proper attorney, property manager, maintenance person, and accountant by your side for when the need arises. Consulting with these people before you invest will give you insight into the market, and get you essential advice and opinions from professionals who deal in this industry.
Keep taxes and other costs in mind
The last thing you want is for your first rental property to turn you away from future investments because of unexpected costs. Analyzing the potential for property tax spikes will help you to build these costs into your monthly rent costs – not planning properly for these tax increases can change your property from being profitable to just barely breaking even. Whether or not you choose to include them with your rent, it’s also important to know how much utility bills will cost you and your tenants. In the current environment in Ontario, especially with hydro, it is wise to not include utilities with the rent because you cannot raise rent above a provincially mandated percentage each year – even if utility costs go up significantly.
Sizing up any potential renovations is another easy way to save money in the long run. Being proactive about any potential problems you can see arising will save you money in the long run, and ensure that your tenants are safe and satisfied with their dwellings. Keep in mind that renters can do more damage than you might realize – being proactive with repairs and renovations will ensure that this damage is kept to a minimum.
Set goals before you invest
As with any investment, it’s crucial that you set goals before you spend a single dollar on your first rental property. You should decide now whether this is merely going to be a hobby for you, or if you’d like to turn it into a very profitable career – this way you’ll be able to create a roadmap for where you want to go, and lay out directions on how you’re going to get there. You may want to rent the property for a number of years and then sell it in order to invest in another property, or you may want to invest in a number of properties and hire a property management company to oversee their day to day operations – no matter what your intentions, having a plan for any situation is an absolute must.
Your money is too important to be spent on an investment that doesn’t fit you and your needs – this is why it’s so important to know your market, surround yourself with the right people, consider taxes and other financial implications, and to set goals for where you want your investment to take you. Without these considerations, there’s a good chance that you won’t be able to maximize the potential of your real estate investment. Contact Highgate today to make sure you are getting the right property to start your real estate investing journey.