Investing in rental properties can be a great way to generate passive income, but it requires careful planning and preparation. By understanding what to look for when selecting an investment property and taking the necessary steps to prepare your property for renters, you can ensure that your real estate investments are successful ones!
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Begin the Search
When looking for an investment property, you must decide what type of property you want to invest in – whether it’s a single-family home, multi-family unit, or commercial building. You should also consider the location of the property and its potential for appreciation over time. Research the local rental market and determine if there is enough demand for rental units in the area.
Suppose you’re ready to diversify your portfolio or just want to browse listings, you can quickly look for homes with a basement unit or a duplex, triplex, or fourplex, thanks to the filtering and segmentation features included in Zoocasa’s search system. Using these filters, you’ll find plenty of available income properties in your area.
Prepare for Tenants
Once you have identified a potential investment property, it’s time to start preparing it for tenants. It’s best to start with repairs or renovations, such as replacing old appliances or updating fixtures. You should also ensure that all safety features are up-to-date and that the property meets all local codes and regulations. Additionally, you may consider adding amenities such as a washer/dryer or outdoor space to make your rental more attractive to potential tenants.
Consider any changes or modifications you might need to make to your current insurance policy if you plan to rent out the space long-term. Ensure all necessary paperwork is taken care of before handing over the keys! Working with a real estate agent can help you determine which policy is right based on the type of property you are renting. They can ensure you are aware of and operating under the code of ethics regarding Canadian real estate transactions.
- Read: What are Legal Fees?
Once your investment property is ready for renters, it’s vital to set competitive rates that will attract quality tenants while still providing a good return on your investment. It’s also wise to screen potential tenants carefully by running background checks and verifying their employment status and income level.
Find the Right Renters
Ask questions on the rental application to cover your bases and increase your chances of finding a fantastic renter. Whether they’ll live in a unit in your home or they’ll be renting a space completely separate from your own, you’ll want to ensure that their goals for the space align with yours. The rental application will help you eliminate applicants who might not be a good fit for consideration.
Do a background check on all applicants. There are online tools that can help you with this, and a real estate agent can also guide you through this process. Before agreeing to rent the unit, ensure you call all the references listed on their application. Follow up with employers, former landlords, and anyone else they might have listed as a reference. You will want to ensure they have an excellent rental history and can commit to a certain tenancy period.
When all else looks great, and you’re down to the final possible applicants, purchase a credit check to see which potential tenant has the strongest credit history. This will give you information on their financial situation that can be very helpful in ensuring their ability and likeliness to pay on time every time.
Ongoing Responsibilities
Once you’ve found the right tenant, it’s time to start preparing the space. You should ensure that all fire extinguishers and smoke alarms are in good working order. Consider adding additional security features like security cameras or locks on windows if needed.
Once your new tenants move in, ongoing maintenance of the property and the tenant-landlord relationship will be necessary to ensure everyone is happy with their living situation. Regular check-ins with your tenants, attending to repairs as soon as needed, and acting swiftly if disputes arise between parties are significant responsibilities as a landlord. Should a dispute develop, having a thorough lease agreement is crucial. The lease terms should outline what is and isn’t permitted in the apartment, your obligations as a landlord, and what you anticipate from the renter. Having this explicitly specified in the lease provides your protection if a renter complains that you said the rental fee was all-inclusive when, in fact, it does not include hydro. In the end, a strong lease is the most substantial protection for a landlord entering the real estate market.
It might seem overwhelming at first, but investing in real estate is a great opportunity. By following these steps, you can increase your chances of getting reliable tenants who take proper care of your property while still maximizing profits! Contact us to speak to one of our agents if you’re looking at buying an investment property, and to learn more about the process.
