In today’s market, many homeowners are considering rental income as a factor when making real estate decisions. More and more people are working short-term contracts, traveling for business and pleasure, and looking for economical non-standard housing opportunities. The rise of VRBOs shows the prevalence of this new industry.
Cities and municipalities are starting to wake up to this trend, and new laws and regulations around rental properties seem to spring up every day. With complicated legal questions to navigate, but plenty of reward waiting for the thoughtful real estate owner, how do you find your first rental property?
Establish Your Financing
Clearly, the expense of purchasing your first rental property will be your largest expenditure. Your first stop should be to your financial institution or mortgage broker, where you can discuss how best to organize the purchase of a rental property.
It’s tempting to make as large a down payment as possible, to reduce your eventual mortgage payments and interest. Keep in mind, though, that you’ll probably have to spend a certain amount on repairs and renovations, plus maintenance while your property is rented. If you have tenants, you won’t be able to defer necessary repairs or expenses until you have better cash flow.
Your financial professional can help you strike a balance between securing a low-interest mortgage and maintaining enough liquidity to keep up your rental property.
Decide On Property Type
If you’re a homeowner looking for extra income, you probably won’t jump straight into buying a multi-family apartment building. Generally, first-time rental property owners look at single family homes. They’re easy to rent, and you can often deal with one set of tenants at a time. As you become more comfortable as a landlord, you can renovate your property as basement and ground-floor suites, depending on the size of the home.
Some rental owners look for turnkey properties to purchase. Turnkey properties are fully prepared to rent out, and often have existing tenants that will remain in the home. These purchases can be great for new rental owners, because there’s little work to be done on the property, and the tenants have already been vetted. As long as you investigate the property thoroughly, turnkey properties can offer an easy way into the rental business.
Plan A Marketing Strategy
You’re purchasing a rental property to make money, which means the worst thing you can do is leave your new property sitting empty and untenanted. As you plan your financing and purchasing decisions, also consider how you will market your property.
Many rental property owners advertise on local classifieds websites, such as kijiji.ca or classifieds.fortmcmurraytoday.com. Good-quality pictures of every room in your property, including kitchen and bathroom, will help your advertisement. Take the time to write clear, engaging copy that lists the features of your property and makes you sound professional and reputable. Your real estate expert can also guide you to places where you can advertise your property.
Have A Tenant Application Process
Know how you’re going to screen tenants and what you should ask about. A credit check is a good first place to start, to ensure your tenants are solvent. Ask for references and check them—don’t assume that if a prospective tenant listed a reference, they must be good. Learn about your tenant’s rental and eviction history.
You should have a standardized application form for all tenants to use. This ensures you won’t forget important details, and it helps you treat all applicants fairly. In Alberta, it’s illegal to discriminate renters based on race, religious beliefs, physical or mental disability, sexual orientation, and other such criteria.
You’ll want a lawyer on your side to help you design a legal and useful rental application, as well as a standard lease to be ready when you find your perfect tenant.
Learn The Law
Every city and municipality has its own laws pertaining to VRBOs. While you’re also bound by provincial and federal law in regards to rental standards, you’ll need to be aware of applicable bylaws as well.
The strongest ally you have in this sector is your real estate professional. Real estate agents and REALTORS® have made their career in learning everything about the real estate industry. Experienced real estate agents in your area have the knowledge to guide you in purchasing your first rental property. Ask potential agents what experience they have in selling rental properties and find one who will work with you to achieve your financial goals.
Coldwell Banker Fort McMurray
The Agents at Coldwell Banker Fort McMurray understand the Fort McMurray market and all the ins and outs of renting in the area. We’d be happy to talk to you about your rental property goals. Contact our office for further assistance, or feel free to email any of our Agents. With the right guidance and a clear vision, you could be on your way to making rental property income in the new year!