5 Things to Consider When Buying an Investment Property

5 Things to Consider When Buying an Investment Property



Published in

Real Estate News

28 May 2021

 Risk in Real Estate Investing

1. Risk in Real Estate Investing

Investing in real estate is fairly low risk compared to other options such as stocks and crypto currencies. However, you need to do extensive research on the property, area, appreciation over time, and future plans around the property to assess more accurately the risk involved. Additionally you need to consider other costs related to investing in a property such as operating costs, mortgage and maintenance.
 Your Financial Situation

2. Your Financial Situation

It is a no-brainer to review your personal financial situation in detail before thinking of investing in a property. Such investments do not come cheap so you should be prepared to spend significant money upfront and overtime if mortgaging is involved. Keep in mind your income to debt ratio as well when considering your financial situation, this could be a make or break if you can use your current funds or not towards the investment. Lastly, consider how much cash you are able to set aside after the investment, this can help cover any closing costs, emergency fund requirements, etc.
 Property Management

3. Property Management

Once you have purchased your property, depending on the type of property you may require management services to keep the property operational. If you are investing in a rental property, it is wise to look for a property manager who can manage the property, maintain it, find tenants, and run the legal and administrative work behind it on your behalf. Doing so will alleviate these tasks from your plate and give you the time to focus on your personal endeavors and other investments.
Location of property

4. Location of property

When investing in property the “where” is more important than the “what” because the price of the property heavily depends on the location. Urban locations will always be pricier than suburban and rural. However, with the high price tag comes a higher profit long-term. Urban lifestyle often tends to be more desirable by the mass population due to ease of transportation, accessibility, social factors, etc. The decision of the property’s location is dependent on who your target audience is once you’ve purchased the property. For instance, if you want to rent out your property to families, you may want to consider investing in a suburban property. Best places to buy real estate in Ontario: HAMILTON, WINDSOR, NIAGARA, LONDON, St. CATHARINES, WELLAND, SUDBURY.
The one Percent Rule

5. The one Percent Rule

The one percent rule in real estate implies that the monthly rent should be set to no less than 1% of the price of the investment property. Your property rent should surpass your monthly mortgage costs. This helps ensure you are not investing your personal income towards the mortgage, rather the money earned from renting the property. This is what will truly make your rental property worthwhile the investment.

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