It may sound very fancy when someone says that they have purchased a house of their own, but you cannot imagine the depth of the amount of money and time required to maintain a home properly until you are making that investment.
Though investing in real estate is no doubt a fascinating way of investing your funds, but before you take a dip into that pool, you should be well prepared and well aware of the market.
Here are some tips for you if you think of buying rental property in the Greater Montreal Area.
Decide your purpose for buying the property
You will need different kinds of house depending on whether you want to make it your home or want to have tenants in that house.
But if you are going to buy it only for investment purposes and your target is to sell it later at a higher value, you have to carefully study the high and lows of the market.
Buy it when the market is low so that you can sell it when the market is at its peak, and you will gain a hefty amount out of the transaction.
Having financial stability
Buying a rental property is not an easy task. You have to pay at least 20%-35% of the total cost upfront, and you will also have to show a valid source of funds for the rest of your payments within 90 days.
Hence there is no need to say that you have to be very sound financially before you enter the real estate market. Make sure you have enough funds to survive the investment, and it is better if you use your own money rather than the borrowed fund, as the professionals suggest.
Maintain continuous cash flow
Buying a house implies you also have to maintain it. And maintenance causes a lot of expenses. Starting from buying insurance for the property as soon as you buy it to paying all the utility bills every month will cost you quite a lot.
If you keep tenants, you will have some rental income, but the expenses can sometimes exceed the income, as you cannot expect tenants throughout the year. So you also have to consider this gap between rental income and expense.
However, the good thing is if you face a loss, then you can deduct it from your other incomes, which will cause a reduction in your tax payment.
Researching about the property
Firstly, before buying a property, always check its resale value so that you do not have to regret it later if you fail to find a profitable selling proposal for it.
Also, check the locality’s crime rate, the availability of emergency services, or stores for essential commodities. All these will help you decide whether you should make the payment or not and will help you set the rent level and check whether the locality has the scope of further developments.
All these together will affect the resale value of your property.
These are few things to consider before jumping to any investment opportunity on rental properties in the Greater Montreal Area.
Many property management firms in the Greater Montreal Area are there to guide you in the process and take care of your property, but they will also take a big chunk out of your rental income.
So think twice and prepare yourself well before you buy any rental property.
MTL GROUP is a property management and financing company, operating in the Greater Montreal area in Quebec. Our professionals are just a phone call away to assist you with your property management and financing needs.