Are you looking to enter the Victoria BC property rental market? With so many things to consider, you will want to do your research before you put that “For Rent” sign out on the lawn!
A Good Real Estate Investment?
According FamilyLending.ca, there are different factors that can determine if a rental property will be worth the investment or not for you.
First, determine how you will be able to finance the purchase of the property. You don’t want to drown yourself in debt just to make a real estate investment. If you’re not sure how you should finance your investment, schedule a meeting to talk to a mortgage broker or bank for options that best suit you.
Next, you will want to assess how much money the rental property can make. What are the local market conditions? Will the amount of rent you can charge cover all your overhead costs comfortably? And don’t forget to factor in the regular costs of maintenance and upkeep.
Benefits of a Rental Property
Real estate certainly can feel intimidating and a bit daunting, but purchasing an investment property in Victoria can be a worthy and profitable investment if managed diligently. For example, some expenses like property taxes, utility bills included in the rent, insurance, mortgage interest, maintenance/upgrades, and property management costs can all be claimed.
Perhaps one of the principal benefits to owning a rental property is the potential income it produces. As long as your tenants are paying on time, having a real estate investment can mean having a consistent, regular income, even without wearing a suit!
Another benefit not to be over looked is the opportunity to build strong professional and personal relationships with others who also invest in property or with your tenants themselves. Building your network, especially in Victoria BC, is never a wasted investment.
Potential Drawbacks of Owning a Rental Property
There’s no guarantee things will run smoothly when making a real estate investment, even in our beautiful city. Perhaps the most obvious potential issue is the tenants themselves. Whether you’re dealing with tenants that seem to never pay on time, are destructive, or somehow cause you more problems than you’d prefer, you may be left wondering why you got yourself into the rental market in the first place. However, there are steps you can take to try and minimize your risk before you hand over the keys, such as:
- Ask for proof of ID
- Perform reference checks (past rental and payment history)
- Perform a credit check
Still worried something could go awry? Check out the BC Residential Tenancies website for great resources and to learn more about your rights and responsibilities as a landlord – and those of the tenants too.
Another potential risk to be aware of is that rental properties could become hard to sell in the future. While this is a problem any property owner could face, it is one that should be considered before signing your name on a real estate investment. Be sure you are comfortable with the risk first.
People often think that buying a rental property will be just like buying a house, only difference being the added conditions of managing the property once it’s been bought. However, you may be surprised to find you might have a hard time financing your new venture, due in part to federal regulations on mortgage rules. Unlike home purchases, any property that is not “owner-occupied” requires a minimum down payment of 20%.
Finally, it is important to give significant thought to just how stressful it can be to be a landlord. Although it’s a great job and can have a lot of perks, it’s not for everyone. Before making a big real estate investment, make sure you are comfortable and prepared to handle everything that comes with it. That includes the upkeep of the property and dealing with tenants, both the good and the challenging ones.