If you’re looking to save money for your retirement, property can be a great investment vehicle to park your funds and have it grow over the years. But with the price of property reaching new heights over the years, you’ll want to carefully choose where you invest to ensure its growth.
But if you’re new to the real estate investment game, you might be unsure where to start and what to look for. Here are some things you should think about to help you feel confident about the property you’re purchasing.
Short-term or long-term
When you can buy a property, you can either choose to hold onto it for few years, rent it out in the meanwhile and then sell it when it appreciates and you make a profit. Some words of advice with this strategy is that whenever you buy or sell a property, don’t forget to consider the closing costs and land transfer tax that you’ll need to pay when your property exchanges hands. If you’ve bought a newly built property or one that’s undergone extensive renovations, you could qualify for an HST housing rebate, even if you’re an investor.
If a short-term investment is what you’re looking for, you may want to consider buying a stucco house rather than brick, according to a recent poll by the Canadian Real Estate Wealth magazine. It’s modern look and cheaper price could make it a better investment for the short-term though brick comes with fewer maintenance costs, a real estate investor told CREW.
Shared principal or solely an investment?
If you plan to buy a property that has a dual role as your home and an investment, one of the key aspects you’ll want to consider is a separate entrance. This way you’ll have a separation in space between your home and your renters. Also, you should always conduct a thorough background and reference check of potential tenants to avoid issues down the road since receiving the go-ahead for an eviction may be a lengthy process.
The best investment property to have is one that pays itself off while you own it. Check out rental listings to find the average price to rent a room in your neighbourhood since that’ll determine how much of the mortgage you’ll need to pay off each month. You’ll want to lease your property competitively, but be aware that while your costs might go up to handle home maintenance situations, some provinces have rent control rules. Your rent will be influenced by aspects, such as the property’s location, amenities, infrastructure, school district and safety.
It may seem odd that this is connected to real estate investing, but the current job market affects whether people are more likely to move to the city. If they are, this means more potential renters, especially if you’ve bought property in a prime location. The more potential renters means more competition to rent rooms, which lets you charge a higher rent. Check the employment numbers of the city you’re looking to invest in and see whether or not there’s been a rise or fall in unemployment rates over the past few months. You’ll also want to research the main employers and industries in the area to get a better long-term forecast. For example, if car manufacturing is a key industry powering the city’s economy, you may want to rethink your long-term property investment.
Since you’ll likely hold onto your property for a few years, you’ll want to consider what will happen to the neighbourhood in the future. Properties in areas with established infrastructure, such as a subway station or a highway, will likely already be priced at a premium simply based on where they’re located. But infrastructure takes many years to come into fruition. If there are plans to build an LRT stop or land is being developed to house retailers, these could all affect your decision on where you decide to buy.
Rebate4U can help homeowners determine if they qualify to claim an HST housing rebate. We strive towards providing our clients with the most professional and quality service in obtaining rebates for their new and renovated homes. We are proud to offer our clients the most personal and attentive service, and we make sure that all of our clients are 100% satisfied.