A colleague of mine asked me this morning, “Can you please give me some quick tips/advice for a person looking to buy a condo unit / home for investment and rental income perspective, eventually selling after 5 years? What’s the best area?” The purchase intends to occupy the unit before the end of the year.
Is the answer to this really as simple as naming an area? I don’t think so. Here is what I wrote back:
- Assuming you are asking only from a rental perspective only and not a “flip” scenario and have pre-qualified the purchaser in regards to their overall intent and ability to buy, the questions you need answered are as follows.
- What sort of return they will be happy with?
- Will they sell if they are unable to rent or can they hold out?
- Who is going to manage the rental, i.e. finding a tenant, collecting rent, addressing maintenance issues regarding the property?
- Has the prospective Buyer/Investor been a landlord before? S/he need to be aware of the new changes under The Residential Tenancies Act, specially be familiar with the Regulations 516/06 & 517/06. Will the buyer (future landlord) be able to this themselves or need professional help every time they rent out the property.
- Is this person a “local buyer” i.e. how important is proximity of the rental property to them?
Once we have answers to these questions, we can correctly advise them regarding the area. That’s it for me. Do you have any thoughts? Please post your comments.