Being a landlord isn’t necessarily for everyone. All the same, there are very definite pros and cons of owning an investment property in Canada. For the right person, the benefits of owning real estate far outweigh any risks. Plus, the downsides are often avoidable with guidance, support, and a well-thought-out plan.
The purpose of this post is not to convince you that you should buy (or sell) a rental property. Consider it a manual for “Real Estate Investing for Beginners.” If you’re excited to dive in and learn about various real estate investment strategies, this guide will show you the way.
Do you want a seamless and straightforward home-buying process? Our detailed investing guide can help!
Who Should Invest in a Rental Property?
When you consider the impact of a less-than-perfect tenant or long vacancy period, it’s understandable why the thought of being a landlord gives some people pause. But everything worth doing has risks, and owning investment property is no different.
If you have capital and a solid plan for minimizing risk, buying a rental property can make sense. Over time, the income potential and equity gains could be substantial. In university cities like Guelph or Waterloo, there is nearly always a number of tenants eager for a place to rent. Often, you have a vast pool to choose from, and it’s just a matter of vetting candidates thoroughly.
Anyone with the resources and a reasonable amount of risk tolerance could invest. However, there’s one type of person we particularly love to see get started in real estate. It’s someone you might not expect, the first-time home buyer!
Why First-Time Buyers Should Consider Investing
It will all start to make sense when you look at buying a home from an affordability perspective. Residence in university is expensive, often exceeding the cost of tuition itself. Buying a house and renting out some of the rooms gives you a place to stay and you’ll have a valuable asset upon graduation.
Plus, buying as an investor can actually be easier than obtaining a starter property, for several reasons.
- Resources like the Home Buyer’s Plan and the First Home Savings Account are normally not available to investors, unless that investment property is also going to be your primary residence.
- You can buy a bigger property, not just a condo, because the rental income will help cover your monthly costs.
- Lenders are often willing to provide more funding for properties with income potential, erasing another major obstacle for first-time buyers.
Do you want to take baby steps as you get started as an investor? Here’s How to Generate Passive Income From Your Primary Residence.
Investing in Rental Property for Beginners in Canada
How to buy an investment property for the first time is a hot topic for beginners. Start by taking stock of all of your resources. Add up every dollar you have in your various bank accounts and investments.
Your resources aren’t just financial. A real estate team like GoWylde that works with first-time buyers and young investors can guide you through each step and help you avoid all of the pitfalls. Buying a rental property as a beginner sometimes requires thinking outside of the box, and creativity is practically our middle name! (We can also connect you with vetted and trusted mortgage experts, contractors, lawyers, property management companies and home inspectors. Whatever you need!)
Lastly, think of the people around you who might be willing and able to help. Perhaps a parent will put up some of the down payment. If anyone else in your circle of friends or family wishes to invest, perhaps they can go on title with you.
Buying a rental property as a group lowers the barrier to entry and reduces the risk for everyone. At the same time, each party can benefit from long-term equity gains, as well as the rich experiences that go along with being a real estate investor.
Understanding what to look for in an investment property is only the beginning when it comes to real estate. The posts below will expand your background knowledge:
- A Complete Guide to Real Estate Investing in Guelph
- What Are the Clauses on a Lease?
- Negotiating With Tenants as a Guelph Real Estate Investor
Tips for Managing Your Investment
Finding a property and running the numbers are only your first steps. Once you have secured the ideal rental, you still need to manage it for your investment to be successful.
This means attracting the attention of qualified tenants, vetting said tenants, maintaining and repairing the property and handling any disputes that arise. Yes, now that you’ve got your property, it’s time to be a landlord. This is the intimidating part for many people.
But don’t forget, help is available! As real estate agents, we don’t just guide you when buying or selling. We can also assist you in finding and vetting the right tenant. If you want a relatively hands-off investing experience, we can even introduce you to trusted property management companies.
How do you know which property management company is the best fit? Here are the top Questions To Ask Potential Property Management Firms.
What Are Your Next Steps?
Once you’ve got a taste for real estate investing, endless possibilities open up. If you want to continue your journey, you might consider the BRRRR method. Let’s back up a moment. What is the BRRRR method? The acronym stands for Buy, Renovate, Rent, Refinance, Repeat, and if you’re wondering how to build a real estate portfolio, this is how!
After several years of owning and renting a property, you may also decide to cash out altogether. Often, students will sell the home upon graduation and use the proceeds to fund their next purchase. Selling a house with tenants can require extra finesse and knowledge.
Nevertheless, think of where you might be in a few years compared to your peers. Instead of thousands of dollars in debt from renting or staying in residence, you could graduate with serious equity and a significant financial advantage, one that will enhance the rest of your life.
Are you still curious about how to invest in rental property as a beginner or grow your portfolio? Our top Guelph real estate agents are here to guide you and answer all of your questions. Reach out today at info@gowylde.ca or call 519-826-7109 for more information.
