Many consider buy-to-let properties a sound investment choice, which should bring a guaranteed return. Alternatively, flipping houses is an attractive real estate option for those who prefer not to rent.
For inexperienced landlords, the reality can quickly find them over their heads, losing money. If you’re interested in generating income from an investment property, the following tips will ensure this doesn’t happen to you.
Decide Your Tact
When deciding to go into real estate as an investment option deciding what option to take is vital. Flipping houses is an excellent option if you’re looking for a short to medium-term lump sum return.
Whereas long-term income is better achieved by purchasing a property to let. Both options come with downsides and time commitments that you must consider. Yet, done right, the financial rewards of these and other options are worth the leg work involved.
Property Management
Suppose you’re busy with other commitments; staying on top of maintenance and other issues within your investment property can take time and effort. Enlisting the services of a professional property manager relieves that pressure.
A condo rental property management in Etobicoke can find tenants, collect rent, and deal with any repair issues that arise on your behalf. Or, if you prefer being more involved, the property manager can work with you to cover the areas you wish to avoid dealing with personally.
Insurance
Sometimes you can take all the precautions possible, and your renters still let you down. Taking out the right insurance policy will protect you from financial loss in the event of excessive damage or unpaid back rent.
The ability to rectify damage promptly without incurring financial loss will keep the property in good condition. If you’ve opted to renovate a house to sell at a profit, insurance secures your investment against unforeseen disasters throughout the process.
Budget
Figuring out the optimum return for a property is more complex than it may initially seem. The rent must cover the mortgage repayment, ongoing maintenance, and other associated costs. You also want a buffer in the bank to cover any downtime between residents to cover regular outgoings.
At the same time, setting the rent too high will make the property unappealing to potential renters, so before purchasing a property, run the numbers and make sure the budget allows is manageable at a reasonable rate.
Taxation
It’s essential to remember that in Canada, rental income is subject to taxation along with regular income streams. As such, you must factor these in when creating a budget for incoming and outgoing for the property.
You must do so to avoid a nasty surprise coming to the end of the tax year. Consult a tax specialist if you need clarification on what taxes you’re liable for to ensure everything gets noticed.
Real estate is a popular investment choice for a good reason; however, only some get a good return. A maximum return is likely by planning and budgeting appropriately and understanding which option works best for your situation.