The financial rewards of an investment property in the Shuswap real estate market can be extremely advantageous. When done correctly, an income property allows you to successfully build an asset over time, while the expenses can be covered by the tenant. But before you jump into the role of being a landlord, here are three critical questions to ask yourself to make sure you’re up for the challenge.
1. Do You Know Your Numbers?
This is by far the biggest piece of the puzzle; if you don’t know your numbers in regards to profit and loss, then you’ll need to spend time reviewing this area before you move forward. Determine your gross income, your monthly expenses, your net income, and your potential returns with the help of a professional REALTOR® and a knowledgeable mortgage broker. You’ll need to determine how much you can realistically charge for rent, and whether that aligns with covering the expenses involved for you, with room to make a profit.
2. Do You Have Sufficient Time?
In a perfect world, you’ll find an ideal tenant that looks after every aspect of the property and treats it as if it’s their own, but that’s definitely not always the case. Self-management of a property can be time consuming when on-going maintenance is involved. For example, will you be taking care of snow removal, cutting the grass, cleaning the gutters, etc. or will some of these duties fall on the shoulders of your tenant? Depending on the type of home you’re renting, you’ll need to consider how much time will need to be invested when it comes to property maintenance and whether hiring a property management company is financially feasible. Ensure you and your potential tenant outline the responsibilities of the property very clearly in your rental agreement.
3. How Will Emergencies and Repairs Be Taken Care Of?
Similar to the question above, you’ll need to have a game plan ahead of time for issues and emergencies that are bound to pop up. You will want to have procedures in place for things like broken appliances, electrical updates, plumbing needs, and other concerns that may occur. Will you be responsible for fixing these items, or will you need to have a property manager worked into your expenses that fields these updates as needed? Prior to purchasing a property ensure you know what needs to be done on the immediate horizon of purchase, and the items you’ll be keeping a pulse on early in the ownership.
Owning a rental property can be a great asset to your portfolio; it’s just important to make sure you understand what you’re getting yourself into. So when considering your options for a Shuswap income property, it’s a good idea to speak with a trusted REALTOR® - and other home professionals who can help you out along the way. Connect with me today to make sure you’re on the right track to have a rewarding and profitable experience as a landlord, so you can build wealth over time.