Location, location, location…
Decide in advance what areas you are going to shop. Do your own research using MLS.ca, developer websites and city websites to help define areas of interest based on current and long-term community plans. Established neighbourhoods may not have the potential financial growth of emerging neighbourhoods, however, they will be less volatile. Be mindful of future development that could also negatively impact your condo. That water view may be blocked in the near future, and while a new SkyTrain station may be coming within walking distance, your condo might be overlooking the track. Understand what is likely to happen and how it could positively or negatively impact the value of a property.
Talk to your banker
First, you have to know what price are you are prepared and able to pay. Talk to your banker, mortgage broker or financial planner to determine how much equity you will require and what you can afford. It is important to clearly understand what all your monthly payments will add up to (with considerations for mortgage payment, strata fees, projected vacancies, repairs, special assessments, property taxes, etc.) and how this compares to the projected monthly income of the investment property. Remember, an investment always comes down to the numbers, so when you start shopping avoid getting emotionally involved and stick to your investment criteria according to the numbers.
New or used?
You need to consider the pros and cons of both. New condos can come at a small premium, but if you shop around you can find great value. New condos will have less maintenance issues and a warranty in place. You can often buy early enough in the development process (even before construction starts) and enjoy up to two and half years of potential market growth prior to completion. When buying used, you need to do your homework in inspecting the premises and reviewing all the strata minutes. Sometimes an investment property may already have a tenant in place, and on occasion can offer a great deal. If you are handy, buying a used condo that requires some cosmetic work can generate a better return if you can avoid having to pay someone else to make the space more rentable.
Consider working with a good realtor
If you have limited experience navigating the real estate jungle, consider retaining a reputable realtor to represent your best interests in the purchase. Hire a realtor who is experienced in the geographic area and housing type you are searching for—likely they will know the good buildings, those to avoid and new or upcoming opportunities to consider. Share with your realtor your precise financial parameters before you start looking.
Your life as a landlord
Managing a rental property is not always easy. You could have a terrible tenant, or have numerous maintenance issues. If the property is located a far distance from you, it could be more onerous to manage. You may consider a rental management company, but this will cost you about six to eight per cent of your rental income, so it should be considered within your investment criteria. You also should learn more about the Residential Tenancy Act to understand your responsibilities as a new landlord.