You’ve thought about it for years. It’s a great way to make extra money in addition to building more equity. But what about the risks? Are there any downsides you should be aware of? Are you really ready to become a rental property owner?
Before jumping in head first and buying a rental property, it’s important to do your research and consider a few important things. Here’s what you should think about before you decide to buy that rental property and become a landlord:
Risk Vs. Reward
When it comes to a rental property, one of the first things to consider is whether the reward is greater than the risk. As a landlord, there are a few risks that you may encounter when you start renting your property to tenants. First, it’s important to understand the rental market and whether there is enough demand in your area to ensure your rental won’t sit empty. Luckily, if you are thinking of owning a rental property in Barrie, that will likely not be the case as rental properties are in very high demand.
Attracting reliable, trustworthy tenants is another essential factor to consider. Remember that dealing with troublesome tenants can be taxing and may not be worth the risk, particularly if damages to your property are severe or you are not able to evict them right away.
With Barrie having one of the highest rental rates, the financial rewards of owning a rental property are pretty clear. You can use that extra income generated to pay down debt, save for retirement or simply save it for travels, an emergency or a rainy day.
The costs involved in owning a rental property are also something to carefully plan for. Keep in mind that your expenses will include regular and expected bills, such as insurance, property taxes or routine repairs, but may also be unexpected costs, such as a broken water heater or a new roof.
In addition to the risks, rewards and costs, there are a few other things to consider. Location is always important when it comes to a rental property. The more desirable the area, the easier it will be to find suitable tenants. You also may want to ensure that the rental is fairly close to your own home, as this will cut down your travels when you are required to do repairs, cut the grass or any other maintenance.
Your time is another consideration. Remember that owning a rental property does require a bit of work. In addition to the tasks mentioned previously, you’ll need to spend some time meeting with potential renters, collecting rent cheques, keeping all paperwork organized, and other miscellaneous jobs.
You may want to consider hiring a property management company that can help you out, especially if you plan to own more than one rental property. Although working with a property management company will involve extra fees, it can help ensure your properties are carefully maintained and managed, and will ultimately save you time and help protect your investment.
Convinced that a rental property is for you? Need a mortgage loan to make it happen? As a qualified and experienced mortgage broker in Barrie, I specialize in helping different clients with different needs find the mortgage that is the right fit. Connect with me today by calling (705) 315-0516.