Three Key Components to Purchasing Rental Properties

1. Do your homework: Demographics, Location, Age, Potential to Rent/Sell
   Always be sure of what you are buying. Make sure that you are purchasing a property that can be easily sold in the future and is in an area that will continually increase in value.
   Watch out for condo apartments. Most people buy condos because they are cheaper, easier to maintain, and are usually the most uncomplicated to rent. With this in mind however, if there are a lot of rentals in the building, the values will not increase as much as a townhome or small detached home. Some Big Banks have even banned mortgage lending on some condominium developments in major cities due to the overall high percentage of rentals in the buildings. Always check with one of our Advisors to ensure there are no restrictions on the condominium you wish to purchase before you firm up your deal.
   Consider buying investment properties that are newer and not too old. The greatest appreciation in property value will be in the first five to seven years. If you choose to buy an older property that has an existing tenant, always check the history. There are restrictions on rental increases if you purchase a property that was previously rented prior to 1991. Again, do your homework and make sure it is a good investment for your future.

2. Lower Stress: Property Manager, Accountant, Legal Advisor, Realtor
   Consider getting a service to handle your rental properties. Most property management companies will guarantee occupancy from their pool of renters and can help clients with high cost executive rentals. They provide services on how to prepare your property and can negotiate lease agreements with tenants and corporate relocation companies.
   If a full service property management company is not for you, there are many internet services that can help you advertise your property and help find potential tenants. When doing it on your own, you will now have to do what the property managers will do to screen potential tenants. Ask for references, obtain a credit report and consider having the tenants fill out a detailed application to determine if they are a good fit for you and your property.
   Talk to your accountant and your lawyer before you purchase to understand the rental restrictions and laws for landlords and tenants in your area. Always be informed and make sure to research all the facets of your new investment so that you can eliminate potential surprises in the future.

3. Protect your Future: Property and Debt Insurance
   Most people will not want to get insurance on their rental properties and will always say "If I die, my family will sell it." This is not a good answer. Insurance provides protection against loss and should always be applied when you take on more risk. The amount of insurance should at a minimum equal the amount of debt that your family would be left with should you die. The rental could then provide monthly income and would ensure the property would not have to be sold in a "fire-sale" to pay for taxes, expenses or unqualifiable debt.
   If married and one spouse dies, the property will pass tax free to the surviving spouse. If however, you both die the properties would pass to your estate and must be considered as a deemed disposal, subject to income taxes, probate taxes and all capital gains taxes. Without insurance, your heirs could be left with very little inheritance after the Government takes their share of all your assets. Don't nickel and dime your families quality of life or your children's future. The cost of insurance is not worth the loss of your hard earned asset and investment property when you die unprotected.
   

There are many new options and creative lending initiatives that will get you the results you seek, so don’t be afraid to ask one of our Advisors. It can get very exciting planning new ways to boost your retirement savings but remember that your emotions build visions and goals, but they should not drive your financial decisions if it is not methodically planned out and budgeted. One must always balance risk and return using a planned results-based strategy built for today's market, your demographics and most of all you and your family.