There’s all kinds of Real Estate investors out there. Their specialities range from flipping houses, residential rental properties, commercial leasing, land development & much more! Today I want to discuss residential investment property. Probably the easiest method of investing. This is when you purchases a home with the intention to rent it out. This is a great way to make a great return and build wealth. There is so much power in Real Estate. You can easily leverage, buy or sell it quickly if you need to. It’s a tangible asset. You might be thinking to yourself, investors must have millions of dollars. However, the truth is, Real Estate investors aren’t anybody special. I have worked with investors who have substantial amounts of money and some who take home an average pay check each month. Anybody can invest in Real Estate. You can hire me as your Real Estate agent and I can guide you through each step. Education & avoiding mistakes is what will be the determining factor of whether your investment is successful or not. Finding the right property is key.
What makes a great rental property might you ask. Here is what I think:
Location is important when buying a rental property. Focus on finding something that is walking distance or a short drive to schools, amenities, commercial buildings, industrial sites, etc. After all, people love convenience. Will they pay extra to live right beside their work or across from their child’s school? Absolutely.
2. Price vs. Value
The goal here is to make money. So please don’t shop emotionally. You need to purchase a property that will keep your mortgaging costs & other expenses as low as possible. So don’t run to the prettiest property or the house with best curb appeal on the block. However, with that being said- you need as much value for your budget as possible. Things like a big yard, lots of living space, many bedrooms, big kitchen, good location etc. are appealing to potential tenants. Also, you must keep in mind resale. You won’t be hanging on this property forever. Eventually you will cash out!
The community you choose is extremely important. Research the town and make sure it is a desirable place to live. Bigger towns don’t necessarily mean higher profits. For example, I purchased a property in Sylvan Lake. Sylvan is a fast growing community with tons of potential. So many people choose Sylvan as their home because it is on the Lake, nearby Red Deer, close to many industrial job sites, etc. The rent values here are just as high as Red Deer.
4. Return on investment
Before you purchase, run the numbers & do your research. What will you profit each month? What will your cash flow be? What is the average appreciation rate on homes in that area? You must be making at least 5% or more off your initial investment or else what is the point?
5. Condition of the home
Last but not least, condition of the home. The goal is to spend as little as possible. Don’t purchase a home that is high maintenance or that requires significant amounts of work. So say good bye to the fixer uppers. That is a whole other type of investing. Buy a home that is move-in ready or requires minimal amounts of work. Unless there’s tenants in the property already, potential tenants won’t be willing to pay high rent amounts for a dump. Small things like changing some light fixtures, steaming the carpets and painting can allow you to charge more. It is a great idea to buy brand new. Then you know there isn’t any surprises and the property will be under warranty. Ensure that things like fencing, landscaping are completed. Those items can be pricey and aren’t always included with new homes. Another thing to keep in mind, look for properties with durable finishings. For example: an expansive soft bamboo wood floor wouldn’t be a great idea. Most tenants just don’t care for the home as good as a home owner would. Look for a property with as little carpet as possible. If the home has a lot carpet, take a non-refundable $300 deposit so you can steam the carpets when the tenants vacate.
If you are wanting more information on investing in residential Real Estate, contact me today. We can sit down together and create a investment plan.
I am looking forward to hearing from you!
Thanks for reading my blog.