This is always the million dollar question when the real estate market slowly improves: Is now a good time to buy a Windsor rental home and use as an investment? Of course, there is no easy answer as it depends on your finances, your time and the commitment it takes to be a landlord.
But many today are looking or at least considering this opportunity since housing prices are slowly rising and they figure this could be their last chance to get a home while there are still excellent deals available. It’s safe to say that not everyone is cut out to own rental properties as it can be a drain on your pocketbook as well as your patience. But for many, it’s proven to be an excellent way to invest in the real estate market and eventually coming out ahead of the game.
So consider the following if you are contemplating buying a rental home or apartment building:
Good Reasons To Consider Buying A Rental Property:
Appreciation: Real estate has proven over and over again, that if you plan on keeping the home for the long-term, that you will see the value of your investment increase over time. It won’t happen over night as those days are long gone. But if you know you are in it for at least five years or more, your home should appreciate.
Provides Cash Flow: Hopefully, your rental price will include the mortgage, taxes, insurance and maybe even repairs.
The Not So Good Reasons To Purchase A Rental Property:
Management: Unless you are hiring a property management firm, taking care of a rental home is tough work. It requires finding excellent tenants who will pay their rent on time, respect your home as if it is their own and are considerate neighbours.
Repairs: Landlords must be prepared for those emergency calls, often in the middle of the night or while you are away on vacation. The cost is usually high to repair and almost always can never wait. It is important that you have a good savings for these type of emergencies.
No Renters: What happens if renters pack up and leave in the middle of the night? Are you prepared to clean and make repairs while searching for new tenants? What if it is several months before you can find anyone to move in?
Advice Before Becoming A Landlord:
If you have weighed the pros and cons, and decided that becoming a landlord is something you want to pursue, then here’s what you need to do to get started:
Research: Talk to other landlords in the area you want to buy, and don’t forget to bend the ear of your real estate agent. Find out what you can afford, how much you can charge for rent and investigate the neighbourhoods to find the best fit for you and to find quality renters.
Prepare Finances: Make sure that you are pre-approved, talk to a banker and determine what you can afford. Also investigate insurance and other legal matters that you need to know as a landlord. You must completely and fully understand the rental laws in case you need to evict a tenant or go to court.
Buy In the Best Neighbourhood You Can Afford: The better the neighbourhood, the higher quality of tenant. Today, with so many people renting, you want to get the best available, and those renters are looking at the best neighbourhoods. Buy in an area with good schools, local shopping and close to public transportation and highway access.
Don’t Skimp On Insurance: Finally, don’t skimp on insurance as there are so many things that can happen that if not sufficiently covered, could wipe you out financially.
And finally, once you have successfully purchased a home, take this advice:
1. Always screen tenants
2. Get everything in writing
3. Collect security deposits and handle correctly
4. Make repairs on time
5. Make sure the home is adequately secure
6. Disclose any environmental hazards if necessary. Think lead paint, asbestos.
7. Understand your rights as a landlord, particularly with providing notice before entering premises.
8. Be respectful of your tenants privacy and always try to handle matters quickly before they get out of hand.