If you want to diversify your investment portfolio, adding an investment home is a very savvy move. Mortgages rates are still very attractive, and housing affordability in the GTA, including Richmond Hill, remains well below the 39 percent ceiling mandated by the federal government. Prices are on the rise, which improves the chances of selling quickly if you discover that being a landlord is not the right choice for you.
Single Family Home or Condominium
Your goal as an investor should be to choose a property that will make you the most money. Start by studying the market in your target neighbourhoods to find out how many of each type of property are available for rent. Keep in mind that it will likely take you four or five years of rent increases before the income will cover the maintenance costs, taxes, and other expenses on the property. If there are a lot of one type of properties available, it may take you longer to cover these expenses. You’ll want to choose the type of property that is in highest demand among prospective tenants.
Estimate Your Operating Costs
It will be easier for you to determine how much your operating costs will be if you decide to buy a condominium, since the common areas are covered by your monthly condo fees. If you are more interested in buying a single-family home for investment purposes, you will have to deal with the fact that some major repairs (roof, furnace, etc.) may come at you unexpectedly.
Look at the Type of Tenant You Want to Attract
Renters of single family homes are more likely to be interested in staying on the property for several years. As a landlord, you want to keep your investment property occupied constantly to keep generating cash flow. Every time a tenant moves out, you will likely be looking at a month or two without receiving a rental payment.
Make sure that the properties you are considering have the features that your ideal tenant is likely to want. If you are looking to appeal to tenants with families, look for a property that is close to schools and recreational facilities. In a situation where your ideal tenant is a young professional, these features may be less important and you may want to ensure that your property is close to public transit or a transportation route.