Thank you to those clients who purchased and sold with me in June!
This month I am going to discuss rental properties and share a question I got about how to get started.
“Steve, I really want to buy a rental property but how do I get started? I don’t have a down payment and I have no idea what type of property I should get or where I should buy.”
Many people find buying their second property overwhelming but its actually pretty simple.
#1: How do I buy a rental without a down payment?
Well there are a couple ways to go about it. First one is do you own property now? Most people looking for a rental property already own a primary residence they can leverage. Second way is to use a line of credit. With interest rates as low as they are why not use the banks money to increase your wealth? The third option is to pool money with friends or family and make a group investment. I have done this many times so I can help show you how I manage this legally and organize the costs and profits etc. just ask!
# 2: What type of property should I buy?
First off what can you afford and what are you comfortable with? Some people jump right in and buy a house as a rental property but that isn’t the only way to get into the game. Buying an apartment can also be a lucrative investment. Most often the apartment can be rented with little to no renovations and the rent will sometimes cover the mortgage, strata fee and property taxes with a small profit left over. As time goes on, the apartment will gain value and rent will go up. If you have a larger down payment a house is a great investment, as land value will always increase with time.
# 3: Where should I buy?
Some people are big believers in location, location, location. Truth is every location can be profitable (for the most part). Why? Eventually as the population increases even rural areas become desired locations. A good example is Calgary. As time went by the city spread to the outlying areas that used to be considered rural. Another change that can make locations more desirable is rapid transit. Coquitlam experienced a boom once Translink announced they would be adding the Evergreen Skytrain line. The real question is how far away should your rental be from you and where you live? If you plan on hiring a management firm it could be anywhere in the world. If you will be managing the rental on your own then it is good to buy a comfortable distance from your home. Being near schools, public transit and grocery stores is always a plus too as it helps keep your place rented.
The person who asked this question just bought a rental property last month once we sat down and figured out the right plan for him. There is no doubt that you can buy a rental as long as you are employed or have equity. The #1 item keeping people from increasing their wealth is risk. People think real estate is risky. The truth is it is less risky than stock investments and some RRSP’s and overtime it can give you a nice profit. People always need a place to live, which makes buying a rental a great investment choice.
When it comes down to it:
Keep It Simple
Have a plan and move forward
Partner with people with complementary strengths
Work your plan and don’t compare yourself to others
Grow slow and steady
Know where your money is, and know where your money is going
I had a busy June. I have a few iPads to deliver! Keep the referrals coming!
1268 Riverside Dr. Port Coquitlam
Congrats to the Jorge Family!
Don’t forget my referral program!
Jax and I will deliver an iPad mini to you for every successful referral you send our way.
Until next month!