Signs You’ve Found a Great Income Property
Are you thinking of buying an income property? You’re not alone. Every year, countless Torontonians decide to park their money in real estate. They’re attracted to the potential for steady monthly income, long-term appreciation, and a more secure financial future. Sounds pretty good, doesn’t it?
Of course, once you settle on buying a property, there are still some big decisions to make. Will you purchase a house or a condo? Should you look near the city’s core, or in one of its charming residential neighbourhoods? While these are your choices to make, having a good general idea of what to look for will help ensure that they’re the right ones.
Here are a few signs that an income property will make a great investment…
The location is in-demand
You’ve probably heard the cliche. Location, location, location. In real estate, it’s absolutely true! The neighbourhood where you decide to invest can determine how much interest you’ll get from potential tenants, the rent they’ll be willing to pay, and whether you’ll have vacancy periods in between renters.
Your best bet is to opt for either a well-established community (where homes have long commanded impressive rents) or an up-and-coming one. There are many ways to identify the latter. Areas that sit relatively close to trendy neighbourhoods can be good candidates, especially if they’re attracting creative professionals—and showing early signs of local business development.
The math works in your favour
We can’t overstate the importance of running the numbers. For each property you’re considering, you’ll want to assess your potential return. There are a few ways to do this.
One of the most effective entails taking stock of a property’s size, features, and amenities—and then comparing it to similar properties nearby. A skilled agent can create a document known as a comparative market analysis that does just that.
Other methods include the Capital Asset Pricing Model (which brings risk and opportunity into the equation), and the Income Approach (which weighs rental income against the initial investment you’ll make).
Working with a financial advisor can help you choose the right approach. If you’re not quite ready for that, try this handy calculator to get a sense of the costs and potential returns for any property!
It’s low-maintenance
What kind of condition is the property in? Has it been well-maintained? If not, you’ll probably have to invest more time, effort, and money into ongoing upkeep and repairs.
You can learn a lot about the shape that a living space is in by doing a visual assessment and talking to the sellers. But the real test, in many cases, is an inspection.
If it’s a house you’re buying, having a professional assess its major systems and appliances can provide real peace of mind. If it’s a unit, you can get an inspection, but it won’t cover common elements. Instead, many buyers opt for a careful review of its status certificate (a document that provides an overview of the condo corporation and its financial well being).
It’s somebody’s perfect match
Lastly, don’t forget to consider every property you’re thinking of buying from a renter’s perspective. At the end of the day, do you know who the condo, house, or townhome you’re looking at will appeal to? Can you picture the tenant who will feel pure excitement at the prospect of moving in?
Think about features, amenities, square footage, and location. Are you considering a home with multiple bedrooms on a quiet street—one that’s located near schools, parks, and shopping centres? It may be well-suited for families. And that modern condo with state-of-the-art amenities in the heart of down? It’s likely ideal for many young professionals.
Looking for an income property that matches your needs, goals, and budget doesn’t have to be complicated. By embracing an informed approach, you can help ensure that the return you receive is worth the effort you put in.
Gearing up to buy an investment property that will work for you? Get in touch to learn more about the process—and start exploring your options!
