With mortgage rates hovering near historic lows, home buyers looking to invest in a rental property have more opportunities than ever. Rental properties can offer a steady flow of extra money, making them a great way to supplement an income. However, in order to make a rental property a success, there are some general strategies home buyers should keep in mind.
Just as with purchasing a primary residence, where you buy a rental property will heavily influence the your investment. The neighborhood in which a home is located will affect the type of tenants you are likely to attract, as well as vacancy. For example, a home near a college is likely to attract students. This could also translate to fairly regular turnover in tenants. Meanwhile, a home in a more residential area will increase the chances of renting to families.
Location also affects things such as crime and nearby amenities. A home in a high crime area can leave buyers vulnerable to break ins and burglaries, as well as make it harder to find renters. Meanwhile, a home near an elementary school will make a property more desirable to renters with young children.
No matter what type of property you're looking to invest in, location should always be taken into account.
Once you've purchased a rental property, it's time to focus on finding the right tenants. There are a number of ways to go about this, depending on what type of tenants you're looking for. If you're renting out a property in an area with limited living options, tenants will usually get ahold of you. However, it's still important to market your property and advertise in order to attract the best tenants.
Newspaper classifieds are an old standby, but with the popularity of digital media, it's even better to advertise online Bulletin board sites, specific housing sites – there are many options for homeowners looking to find renters. It may also be a good idea to put up advertisements in areas where the type of tenant you're looking for may frequent. These can include everything from coffee shops to universities.
Once you've attracted potential tenants, it's time to evaluate them and decide on who you want to rent your property. Being a landlord requires care and attention, so it's important to choose wisely when finding a tenant.
Finding out the the number of tenants, their income and employment status are all important. Additionally, you should ask for references and receive written permission to check their credit history. You may also want to find out if they have any pets, or if they smoke.
However, homeowners must remember that they cannot base their decision on who to rent to on any factors that violate a person's human rights. This means factors such as race, ancestry, place of origin, color, ethnic origin, citizenship, creed, sex, age, marital status, family status, handicap and the use of public assistance should not play a role in choosing a tenant.
The Human Rights Code may vary depending on your province, so take the time to understand what you can and can't base your decision on. Asking a prospective tenant the wrong question could leave you open to legal action and charges of discrimination.