You’re getting ready to purchase your first investment property - great! One of the many beauties of real estate is that it can offer different ways to generate income and add diversification to your portfolio. In theory, between the time you buy your home and the time you sell it, it will hopefully increase in value enough to make your initial investment (and all that waiting time) worthwhile.
Here are the most important factors to look for in a high-return property:
A great location has always topped the list among homebuyers, renters and investors, for good reason. This is one thing you can’t change about a home – you can’t renovate a bad location! Location also impacts a number of other important factors, such as access to work, shopping and services, main traffic arteries and highways, public transit, parks, etc. The more boxes you can check off on your list, the better in terms of investment value – both for resale value, and rentability of your property if you choose to seek a tenant.
Unlike the location, the property itself is something that you can control. Again, your intended use of the property will dictate your requirements. You might not be spending as much time in your investment as you would in your home, so try to look at the purchase objectively and determine what makes the property a great investment. What you want in your home might not be what most buyers or renters are looking for. If you’re buying the place as a principal residence, your lifestyle is key. How many people live in the house, and how much space will you need to accommodate everyone comfortably? Do you work from home? Do you host overnight guests? The home will either have to meet those needs, or you’ll have to renovate. Take this into consideration when determining how much you’re willing to spend.
It’s a great way to achieve your dream home in your preferred neighbourhood. When looking at a property use a critical eye to avoid a loss on your investment. If you’re in it for the long haul, the years that you own the property, combined with some smart upgrades, are the key to maximizing your ROI.
Investing in real estate has paid off for many, and that’s one reason it continues to be in such high demand in Toronto. Be patient, realistic, and more importantly, have a plan and understand any potential risks about purchasing your first investment property.