If you’re looking to buy your first rental property, the first thing you should remember is that it won’t be easy. You will have much to learn about residential properties, even if you’re already a property owner. Despite the challenges posed, good property management of your first residential property will make for a stable financial income. This specific investment is extremely beneficial, as you will be able to generate a passive source of income, as well as enjoy tax benefits brought about by depreciation.

Before you dive in and purchase a residential property, it’s important to sit down and ponder on every possibility. Moreover, you should be armed with technicalities, like how much your downpayment will be, as well as which neighbourhoods are best to invest in. Below is a simple guide that will help make the process a tad bit easier for you:

1 – Research on the Rental Market

It’s easy to simply just go out, purchase the first residential property you see and have them rented out. However, there are considerations you need to learn, such as how the rental market works. That is essential to transforming your residential property into a stable income. The trends and growth of the rental market in your chosen area should play a critical role in your decisions, particularly when choosing a property to purchase. To further help you with your research, here are some factors you need to look at:

• Demand for a rental property in the area
• How much the average rental fee is
• How much the properties are in the area
• Local economy stability

2 – Remember the 20 Percent Downpayment

Loans for purchasing a primary residence will only ask you to pay as little as 3.5 percent as down payment, but the same does not apply when you purchase residential properties. It may come as a shock to you, but mortgage companies often require a full 20 percent downpayment for rental property purchase. If you’re adamant about buying your own, ensure that you have enough money saved to afford the initial payment.

3 – Steer Clear from Cheap Properties

It will be tempting to buy a property at a cheap price—the price will be enough to boost your confidence in engaging in a renovation project, thinking it’s not much work. Regardless of its affordability, it’s best to avoid investing in such properties. That will only lead to stressful days and unforeseen expenses, mainly because a ton of time and money will be involved.

You may need a new door for the rooms, or perhaps discover that the water system is in need of replacement. In addition, your opportunity to finally earn will be delayed, as house tenants will not be able to move in when renovations are on-going. Remember that rental properties operate in a steep learning curve, meaning your first year of being a property owner can be difficult. If you add the complication of buying a rental house project, the process will be even more difficult. Buying a fixer-upper may be a good investment for experienced property owners, but as someone just starting out, look for properties that offer the following:

• No major defects and repairs
• Completely functioning appliances
• Thriving lawn

Conclusion

Buying your first residential property has all the potential to be fruitful, but the process will not be easy. It’s more than just scouting for options and choosing the cheapest, as it requires extensive research and intact resources. If you choose to invest in affordable property, the chances are that you’ll only end up with a loss of money and a headache.

If you want your hunt for the best residential property to succeed, you’ll do better with professional help—you don’t have to work all by yourself. As the best property management company in Ottawa, Fahel & Co won’t let you down. Let’s plan your rental property investment now—chat with us!