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How to Prepare for Your First Rental Property

How to Prepare for Your First Rental Property

Couple being handed keys to new homePassive income. A solid, long-term investment (particularly if the value of the property increases). Why wouldn’t you want to own a rental property? Although there are definitely quite a few benefits, there can also be a few downsides if you’re not prepared to buy your first investment property. Here are a few key tips to help get you ready for your new role as landlord and investment property owner.

Do your research

Economic climate/ financial circumstances

Being informed is where it’s at, specifically when it comes to buying your first rental property. There’s a lot to know and a few pitfalls to avoid, so doing your research beforehand is best.

To begin, it’s a good idea to have a good understanding of the current economic climate. Are housing prices currently low? Sweet! Are home values expected to decrease in the future? Not so sweet. What about interest rates, and your own financial circumstances? Are you really ready to afford a rental property at this time? What costs will you encounter throughout the process of buying and owning this type of property? This is where your time spent researching is well worth every minute.

The area

Knowing the rental market in your region is also important. Are rentals in high demand in your area? What is the average rent? What is the target market in the area (students/elderly/professionals)? What type of municipal bylaws regarding rental properties exist in this area? The City of Barrie as an example has a helpful, dedicated page on their website discussing the various rules and restrictions concerning rental properties in the city. Check it out here.

Follow the rules

It’s not only important to be aware of the municipal bylaws that may be in place regarding rental properties, it’s also important to be aware of the rules governing the relationship between landlord and tenant. The Residential Tenancies Act defines the rules, regulations and responsibilities that both a landlord and tenant must follow, including the new Standard Lease Agreement. For information about the act, visit the Ministry of Municipal Affairs and Housing website so that you are up-to-date on all important details.

Know your tenants

Your market

As a landlord, knowing your tenants can help avoid a few potential headaches (and the need to put in a complaint with the Landlord/Tennant Board). Firstly, it’s important to determine the target market you’d like to rent to. Are you looking to rent to college or university students living away from home, or would you prefer to rent to retirees or young working professionals? Whatever you decide, it’s a good idea to cater your rental property to this target demographic. The goal is to attract – and keep – good tenants!

The individual

Screening your tenants is also a highly recommended practice. References from past landlords, personal references and credit checks can give you a good sense of whether someone will be a responsible tenant and a good fit for your rental property. Your rental property is a big investment, and you’ll likely want to take those extra steps to protect it.

Owning a rental property can be a great way to establish financial security and build wealth – as long you’re informed and prepared. Finding the perfect mortgage solution can definitely help. Contact me today at (705) 315-0516 to determine your needs, review your options and take the first step towards making your rental property dreams come true.

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