Like many investments, real estate can seem risky, but if you plan correctly, you’ll be about to make any property a sound investment.
Is It a Good Time to Buy?
Before we look into the actual property, there are a few things we need to consider. First, do you have enough money to put a down payment on a property? It’s highly recommended to have about 20% of the actual property you want to get. In Windsor, the average property is about $350,000. In order to get a property around that cost, you would need to have $70,000 for the down payment.
You should also look into the amount of closing costs that can come with a property as that can be a hidden fee that you may not know about. In Ontario, the fees are roughly 1.5 – 4%. If your property costs $350,000, you can pay up to $14,000 in closing costs alone. It’s always best to have about 25- 30% of the cost of the property you want to buy so that you’re prepared for the down payment, closing costs, and any other fees that you may need to pay.
What Property Are You Looking For?
There are many properties out there that can be made into rental properties, so it’s a good idea to figure out what you’re looking for. If you buy a house, are you willing to make it into a duplex or will there be a shared area? Are you willing to put in the work to turn a property into multiple units or do you want to buy a property that already has been turned into multiple units? These are some of the questions you have to answer as the choices you make will have a difference on how much money comes in and how much property taxes you pay.
You should also take a look at the utilities at any property you’re looking at. Things like water and gas lines will run differently in different rooms. It’s a good idea to test out water pressure in all the bathrooms and areas with sinks as well as the heating in each room. The last thing you want to deal with is a flood before tenants even move in.
What Does the Market Look Like?
How hot or cold the market is will tell you what’s available and how much people are willing to pay. If people are constantly paying over the asking price for a house, it’s a good idea to have a little extra money on you. If houses consistently stay on the market for years at a time, you could give low ball offers and walk away with a property with money in your pocket. Take a look at your current market or the market you want to buy a property in and see how fast houses get sold.
Learn About Landlord and Tenant Laws
Before becoming someone’s landlord or having any tenants on your property, it’s a good idea to look up your state or province’s laws around landlords and tenants. Each country, province, region, and city has laws on how much you can increase rent, add new units, add or remove additions onto a property, and the proper ways to evict tenants. Take a look at your local laws to make sure you aren’t liable for a lawsuit if something goes awry.
Ask the Experts
Even with all these tips and tricks, there are probably a number of investors in your area that have some tips for you as well. Don’t be afraid to talk to the investors in your area about the best things to do in your area and what to avoid.