Whether looking to purchase an income property as another revenue stream or to add to an investment and retirement portfolio, people who’ve taken this route have enjoyed economic security and financial stability. But taking those first steps to acquire property assets can be scary, unless you do the math first, weigh the pros and cons of ownership and consider a wide range of factors.
Once you think you’re in a financial position to purchase, consider the market. The price of a home is obviously going to be one of the first considerations, but don’t jump at the opportunity to find a place with the lowest property value. Chances are, it’s cheap for a reason, especially if it’s in such poor condition, you might not realize a return on investment if you sink a lot of money renovating the unit. A home that’s been on the market for a long time is a good sign that even the most frugal investor doesn’t want to buy it.
Besides price, another good signal for potential revenue through renting it out is in checking the vacancy rates across the city and comparing them to the national average. If it’s lower, that’s an indication that the housing market is attractive to renters. Such is the Case in Calgary, which in 2012, had the lowest vacancy rate in the country at 1.1%, twice as low as the national average. And despite the economic downturn of late, vacancy rates are still low. Keep an eye out for patterns of immigration and where they might be headed. A good resource to research such trends can be found on settlement.org.
Researching which neighbourhood to find your dream investment property will go a long ways towards realizing revenue once the title changes hands. If chain stores and strip malls are being built in the area, that’s a good sign those future businesses have already done much of the homework in assessing neighbourhood growth. Also look at proximity of the property to schools, churches, public transit and other services. If crime rates are high and the statistics indicate the neighbourhood is rather transitory, that’s a red flag against investing.
Also consider what type of home to buy. While the focus is starting to shift towards condos, single detached bungalows still lead the pack in appreciating value, increasing on average by 3.5% annually, while the rise in condo values is roughly around 2%. Still, revenue streams favour bungalows, where floor plans can be altered to incorporate extra rooms for rent, including a basement renovation to add another rental suite. Still, a lot of your decision will depend on the condition of the home as well as fees, mortgages and other costs.
Finally, to ensure your bases are completely covered, consult the expertise of a realtor who has considerable experience in property income investing. Such an expert will have access to such resources as property managers, lawyers, insurance advisers, accountants, home inspectors and other professionals fitting your needs.
Call our office at 403-444-9198 to realize your property investment opportunities.