Guiding Principles For Owners of Tenanted Residential Properties
- Treat the property as a business. Dont think that ll you need to do is buy it, rent it and forget it. Decisions will need to be made from time to time regarding maintenance and upgrades, rent reviews, new leases, etc. Even if you hire a property manager that will do the work, they can only do what is instructed.
- Unwittingly breaking a law. Make sure you understand landlord laws, your responsibilities and liabilities, and the ins and outs of leases.
- Get pre-approved first. Talk to a mortgage expert before you start your search so you know how much you can qualify for and you know what you are going to require.
- Factor in running costs. Consider all of the related costs of ownership including, bu tno tlimited to insurance, property taxes, repairs, special levies and strata fees if applicable.
- Work with a buyer’s agent. Work with a trusted real estate agent that has experience and knowledge on buying investment properties. Buying an investment property is about numbers while buying your own home is about an emotional purchase.
- Do not buy a property sight unseen. Conduct a personal site inspection yourself, or have your real estate agent who knows exactly what you want. This is a big investment surely you can take the time to inspect it.
- Check out the property adequately. Having the property professionally inspected can help avoid unexpected expenses. There are many potential problems with any home that you are not likely to pick up yourself.
- Have access to enough funds to cover unexpected expenses. Plan for emerging issues such as the property sitting vacant for a period of time, budget for mortgage payments in the event that they increase and have access to lines of credit or cash to cover the cost of a new roof or furnace.
- Establish and follow a proper and efficient maintenance schedule. All properties have fixtures and fittings that wear out or are damaged whihc is why you should haave a preventative maintenance routine.
- Have a long range plan for your investment. If you expect to get rich quick, you may be tempted to set the rent too high and lose your tenants. Research comparable property rent rates and be reasonable.
- Do not become a slave to the property. Decide how much your time means to you. If your investment property becomes a second full time job, is it really worth it? Factor in the cost of a property management company, if necessary.
- Check the property and tenants periodically. Ask for references and follow them up. Run credit checks. If applicable, drive by the prospect’s current property and see how well it’s cared for.
- Conduct regular financial analysis. All business owners regularly review their financials by creating monthly and annual statements of receipts and expenditures. Conduct an annual market appraisal to see how the value of the property is going. Sometimes it is strategic to sell off some assets and purchase new ones.