Tips For Purchasing Your First Rental Property

November 15, 2021 | Posted by: Alex Vinarski

Tips For Purchasing Your First Rental Property

Having a rental income is a huge benefit that helps landlords gain financial freedom. Though the additional money each month is helpful, it takes time and effort to make rental properties work for tenants. Below are a few tips to help you get started, presented below by Invis.

Deciding on a Location

The return on your investment for a rental property depends largely on how high the associated expenses are. Real estate location is one of the main factors that determine the price of a house. For lower out-of-pocket costs, select property in a cheaper location. Another factor to consider is whether it is less expensive for people to buy or rent in an area. Buying rental homes in areas where it makes more financial sense to rent means a larger pool of renters to choose from and less likelihood of carrying expenses with no income to offset them.

Making the Purchase

Those interested in becoming real estate investors can be unsure how to actually get started on a mortgage. If you are in Canada, Invis can help you with your financing needs. There are a few ways you can buy your first rental property with relatively low risk. You can also use the Invis pre-qualification tool to learn how much mortgage you can realistically afford to pay every month.

  • House hacking: Buy a multi unit home to live in while you rent out the other units to cover the mortgage and make a profit. This arrangement allows landlords to take out only one mortgage and still benefit from the extra cash renters provide.
  • Buy, renovate, rent and repeat:  

Managing the Property

Before purchasing a rental property, you must think about whether you will handle its management yourself or outsource. It may seem simple, but property management actually entails a lot of details such as lease agreements, tenant screening, move-in walk-throughs, move-out walk-throughs and rent collection. If you already have a lot on your plate, you may not be able to take on these additional tasks. This is where a property manager would be useful. Property managers can help fill vacancies and take the tenant through the rental process, leaving the owner free to pursue other endeavors.

Appealing to Renters

In places with plenty of swanky rental properties available, you need your property to stand out. To accomplish this, consider a basement renovation to cater to the desires of local renters. Ideas include a high-tech entertainment center, home gym, yoga/meditation area or game room. Check out other nearby rental homes to get a sense of what works in that locality. You can attempt to do some of this work yourself, but working with a skilled contractor reduces stress and increases quality. If you choose to install carpeting, include subflooring as basements are prone to mold. Before hiring a contractor, however, make sure you get a few quotes from prospective candidates.

Making a hefty profit as a landlord is possible, but it requires foresight and cash. Following the tips above can provide you with a healthy start toward meeting your goal of owning rental property.

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