Rental properties are a great source of passive income, not only in Canada, but all over the world. While this method of building personal wealth may appear as a no brainer, it’s crucial to know the ins and outs by doing research. For one thing, there are so many factors you have to consider when buying a rental property such as the current market value and location.
But how can you generate passive income from your rental properties? Planning, knowledge, and experience are required to attain your property investment goals, so kickstart and gain more knowledge about the best rental properties in Canada by visiting https://www.strategicgroup.ca.
Here are some effective ways on how to make a steady flow of passive income for many years:
1. Determine the Edge of Your Rental Property
The number one factor tenants consider when finding a property to rent is the location. Knowing the amenities, services, and establishments near your rental property will help you create effective strategies to attract more tenants. That’s why you need to determine the edge of your rental property, such as accessibility to the following facilities and services:
- Workplaces. People want to stay close to their workplaces to save time and gasoline.
- Groceries and convenience stores. You can rent the ground floor for small businesses and the upper areas as residential units.
- Schools and playgrounds. If your property has proximity to schools and universities, expect to have more students and teachers as tenants.
- Hospitals, clinics, churches, banks, and government offices. People prefer rentals that are accessible to.
Note: Marketing your rental services online through social media and having your own website is a great idea to attract more tenants.
2. Add Value to Your Property
Upgrading your amenities and fixtures can add value to your rental property. If you want your tenants to stay, don’t settle on what you already have because if you lose tenants for a longer period, that means more money spent on utilities and mortgage and low or zero ROI. You can add value to your rental property without breaking your bank by:
- Replacing old shower heads and faucets with something new and modern
- Updating bathroom light fixtures
- Replacing worn out or painting old cabinets
- Giving your living room walls and ceiling with a fresh coat of paint
- Replacing old carpet
3. Know Your Investment Property Mortgage Considerations
If you’re shopping around for an excellent investment rental property, you need to consider the number of units or rooms the building will have. This step is critical to the amount of money you need to prepare for the down payment, mortgage rates, and real estate tax computation.
Knowing your financing options, expenses and obligations will help you prepare for a successful purchase and rental operation, thus keeping a constant flow of passive income for you. Here are good-to-know facts about property rental investments in Canada:
- In Canada, buildings with one to four units are zoned as residential. That’s why the qualification criteria are stricter. Also, the financing options are steep as compared to principal residence mortgage.
- If a building has five or more units, the property is zoned commercial. A lender will require you to take a commercial mortgage which has higher interest rates.
- Your multi-unit rental property is called as owner-occupied if you live in one of the units. If all units are rented out, the property is considered as a non-owner occupied.
- There’s a big difference in the percentage of down payment between owner-occupied and non-owner occupied properties.
- For a non-owner occupied investment property, a Canadian is required to pay a minimum of 20% down payment. Generally, owner-occupied properties pay lesser than non-owner occupied properties.
4. Invest in Multiple Rental Properties
Once you already have the experience on rental property investments, it’s about time to keep the flow of passive income coming by investing in several rental properties. The more properties you rent, the more money you make. But how can you handle all these properties? A rental property manager can help you by:
- Keeping tenants for long-term
- Collect rental fees efficiently which minimizes drama and procrastination
- Lower your maintenance and repair costs because of strict supervision and rules reinforcement
- Avoid dealing with bad tenants which is less stress and hassle for you
Hiring a rental property manager will generally lessen your stress and hassle as the landlord. In that way, you can focus on the business side of things.
As a real estate investor, you should aim to double or triple your ROI as soon as possible. However, achieving your target goal takes a lot of patience, hard work, and continuous learning. Keep yourself abreast with the latest trends and news about rental property investment to remain competitive. Most of all, make your rental properties more attractive to tenants by offering something new, unique, comfortable, and beautiful.