Given the bullish nature of Canadian real estate investors at the moment, and the fact that you are reading this article, it is a safe inference to make that you might be thinking of investing in rental properties. We won’t be debating the merits or otherwise of investing in rental properties in this article. Instead, we’ll be sharing with you a few solid tips for finding the best rental properties that will yield consistent returns at relatively low cost.
#1. Identify your target customer
Different people are going to have different requirements and even if these requirements vary only slightly, every little variation could have a major impact on the eventual decision taken by the buyers. For example, a couple looking for a 5 bedroom home with a nearby day care is not likely to be satisfied with having a 5 bedroom property with no suitable day care in the area nor with a 3 bedroom property with a suitable daycare in the area.
People generally want what they want. Accurately identifying your target customer and their most uniform requirements will make it much easier for you to determine the right property to invest in.
As alluded to in the previous point, potential renters will most likely be concerned about the nature of the neighborhood in which your property is located. If you have executed point one correctly, then you should know what sort of amenities your target customer will be looking for and you should look to acquire rental properties in such areas.
#3. Property taxes
Property taxes are not uniform across the board, and this is one very important factor you will need to consider, as the amount of tax you will have to pay will obviously have a direct impact on your income.
#4. Job market
Here’s the thing to note: most people looking to rent a home instead of buying one, are people who do not have plans to settle down and lay any long term roots in the area. So you will need to be aware of what the unemployment rates are, what future opportunities there might be, and any other factors that might affect jobs, and consequently affect the demand for rental properties
Just like property taxes, insurance rates are not usually uniform for all areas and you will need to check what the going rates are for insurance in your location of choice. High insurance costs can reveal hidden issues with your property or with the area as it indicates that the insurers consider your property to be a relatively high risk.
To really succeed as a rental property investor, you will need to think like a person looking to rent a property. This is pretty much a universal business rule but in real estate, you have to be careful as it could be easy to confuse the desires of a people looking to rent as being the same as those of people looking to buy property. Hopefully, you’ll use the tips we have shown you here and make some great investments.