If you think you’re ready to take the leap of investing in a revenue property, also called “rental” or “income” properties, then there are some things you’ll need to consider first.
You must check the comparable properties in the area, and not just how much money you’d like to bring on or how much you think the rental is worth, when considering what price to set the rent at.
If the rent you are asking for is significantly higher than other rental properties in the area, chances are high that you will be left without a renter. A realtor can assess your property and make a realistic recommendation for the amount of rent.
You will also need to account for fixed and unexpected expenses, such as property tax and replacing appliances, or when the suite sits empty without a renter. You should have enough money saved to cover each of these contingencies.
Before buying a revenue property, you will need to find out if proper permits were taken out when it was built. Every municipality has different bylaws and regulations on income suites. If an illegal secondary suite is reported t, the owners may find themselves paying fines or being required to gut the illegal suite at their own expense.
Before buying, have a realtor look into the zoning of the residence and to investigate if all construction was done using the proper permits.
Another important point to note is that under Canada’s new mortgage laws, a buyer must have a down payment of 20% or more for a rental property that includes one to four units.
There is much, much more that you should know, so make sure you do your research, and consult a professional.
Realty in Red Deer has the professional expertise to help you navigate your real estate needs, whether you’re looking to buy your first home, or you think you’re ready to make an investment in a revenue property. With access to Multiple Listing Services (MLS) systems, we can match you with the perfect property for your situation and budget in the Red Deer area.