Investing In Rental Properties For Beginners Buy Low Rent High

Real Estate Wholesaling In Canada

Real estate wholesaling can be an incredibly profitable venture for Canadian real estate investors. Heres a quick run-down on how the process works:

The main disadvantage and risk of real estate wholesaling are if you cant find an investor willing to take the deal in the contracted amount of time.

Things To Consider When Buying A House

Buying a house is one of the biggest financial decisions youll ever make. You need to think carefully about whether youre ready and able to buy a home and what type of property will work best for your needs.

Its important to ensure that your home will be a good investment not just now but in the long run.

Buying a house is expensive, and incurring debt will increase your overall expenses. Before you take out a mortgage loan, make sure that you have considered the following factors:

Enter Without Proper Notice

Even though the premises technically belongs to them, landlords cant enter a rented home whenever they feel like it. According to many state statutes, they must provide at least 24-hour notice if they wish to enter an occupied property.

The notice must outline the reason for access and must be given in writing unless indicated otherwise by the tenant.

When a landlord gives proper notice, whether it is to make repairs, conduct a routine inspection, show the property to prospective future tenants, or carry out any other reasonable request, their tenant may have to invite them to the unit.

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Determine If Buying An Investment Rental Property Is Right For You

Forget the TV sitcom stereotypes of clueless landlords. To make the most of income property requires an accountants eye for detail, a lawyers grasp of landlord-tenant laws, a fortune tellers foresight and, should you choose to manage your rental property yourself, a landlords firm-but-friendly disposition.

Where people who want to become landlords fall short is, they dont realize how much work goes into it, says Diana George, founder of DG Design Group.

So before you leap in, youll want to consider whether you have the time, willingness and skill to put into managing a rental. While rental property is considered a passive investment, that doesnt mean youre fully passive in managing it.

Over the long-term, real estate investments may compare favorably to other long-term investments such as stocks, but the results can vary significantly depending on the circumstances of the region and specific property. Youll want to consider whether you think you can increase rent payments over time and why the economy surrounding the property would support that, among other issues. Whether or not you finance the property and the terms of any financing can have a significant impact on the return you ultimately earn.

Mistakes Can Be Very Costly

Even the best researchers can make mistakes. Ive met investors who fail to account for important details, such as a poor building foundation, that cost them a lot of money on the back end to repair.

These mistakes can be very costly, cut into your profits, and may even result in you losing money. Meticulous research is the best way to hedge against this risk. If you dont know much about real estate, then youll definitely want to work with a reliable appraisal specialist.

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Real Estate Market Is Unpredictable

Similar to the stock market, the real estate market isnt easy to predict. Many real estate investors make a deadly assumption and believe if the market is hot today, it must be hot tomorrow. But thats simply not true.

While real estate prices do tend to rise over time, the market could change drastically . Supply and demand, interest rates, and changing demographics all play a role in which way the market will swing. And, though you could buy property in a hot market today, nothing guarantees it will remain hot in the future.

Tips For Buying Your First Rental Property

Thinking about purchasing an investment property? Purchasing rental real estate requires knowledge of leasing, mortgage loans, tenant and landlord relationships, and property management. Buying real estate can be lucrative but, just like any investment, comes with benefits and challenges.

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Best Customer Service: Brickkicker

• Excellent customer service for customers and franchisees

• Abide by code of standards and ethics from InterNACHI and ASHI

• Home inspectors are trained in their BrickKicker University

• Inspectors go through extensive background checks

• FAQ list is short only three questions

• 35 territory locations in 21 states, but there are no BrickKicker services in most of the Midwest and Rocky Mountain regions

• Website provides less detail about the inspection items than other winners

With inspectors certified by two professional programs plus BrickKicker University, BrickKicker earns the title for best customer service. Each of the inspectors is educated, trained, and certified in their specialized BrickKicker University to ensure a unique approach and service in all locations. They are credentialed by both the International Association of Certified Home Inspectors and ASHI.

Founded in 1989, BrickKicker has been dedicated to providing buyers, sellers, and property owners across 21 states a superb and memorable home inspection service.

The inspection includes an examination of readily accessible areas, physical structure, and operating systems of the home. Once the inspection is done, customers and their real estate agents receive a comprehensive computerized report with thorough details and a summary page with recommendations by the inspector. There is no warranty but check with your personal BrickKicker home inspector to see what they will provide for a local limited guarantee.

Is Your Rental Property Generating A Good Return

So, how do you assess a rental property purchase? One thing to consider is whether or not the property could generate a good return. Here is how I would crunch the numbers.

For the record, I do not sell investments or real estate, so my intention is not to encourage or discourage buying rental real estate. I think it makes sense in some circumstances.

Consider the following scenario of a condo purchase in Ontario . Some of the numbers below may seem high or low depending upon where you live they are just for the purpose of discussion.

The rental income comes to $24,000 in the next year, while the mortgage payments are $26,567 and the other expenses total $8,000.

Do the math and you can see this property runs cash-flow negative by $10,567 over the next year . Sounds brutal, right?

If we assume the investor does not claim depreciation on the property, there is also tax payable on the net rental income each year. Depreciationcalled capital cost allowance can be used to bring your net rental income down to $0, but not to create a loss. However, upon sale of the property, your previously claimed CCA is brought into income and typically taxed at a high tax rate.

The mortgage principal payments of $8,914, over the first year of the mortgage, are not tax deductible. Only rental property interest can be claimed on your tax return. So, the property has a small loss of $1,653 for the year for tax purposes.

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How Can A Realtymogulcom Reit Help Me Get Started In Investing

If the thought of searching for the right rental property, trying to calculate your return on investment, and dealing with tenants leaky faucets sounds like more than youre willing to take on but youre still interesting in investing in real estate one alternative might be to invest in MogulREIT II, which exclusively invests in multifamily apartment buildings.

With an investment in MogulREIT II through RealtyMogul, you can enjoy many potential benefits including the chance to realize a long-term return through appreciation of the properties included in the portfolio, and the chance to enjoy ongoing income typically paid out quarterly.

Additionally, because a MogulREIT II is a truly passive investment real estate and property management professionals find and then manage the day-to-day operations on these deals such an investment gives you the potential to enjoy both the short- and long-term returns of investing in a rental property without having to do any of the work.

Of course, as an investor you should carefully consider the risk factors involved in MogulREIT II before purchasing shares. Risk factors include the overall risks of the real estate market as well as the minimal operating history of the REIT and the ability of the REIT to implement its investment strategy. For a more complete set of risk factors please review the Offering Circular.

You can learn more about investing in MogulREIT II here.

Best For Sellers: Us Inspect

US Inspect

• No expressly written warranty check with your local inspector to see what they offer

• Services available only in 20 states

• Prices are on the higher end of the average range

With a 20% faster closing time and generating a 2.3% higher selling price, US Inspect offers sellers a more efficient selling process when they order a pre-listing home inspection, making them our best option for sellers. The company started providing residential home inspection services in 1987 and currently offers its services in 20 U.S. states. They have completed more than three million home inspections.

A pre-listing home inspection provided by US Inspect includes an examination of the condition of the propertys exterior, roof, structure, water control systems, insulation and ventilation, electrical, HVAC, plumbing, fuel services, appliances, and environmental systems. In addition to this, they offer other residential inspections such as termite, radon gas, swimming pool, lawn sprinkler, well, septic, and specialty inspections, as well as phase inspections for new constructions.

The majority of their inspectors are Certified Real Estate Thermographers. Every US Inspect home inspector is a member of a professional trade association, such as the American Society of Home Inspectors. US Inspect home inspectors who deliver radon gas tests are required to complete a 16-hour course approved by the National Radon Proficiency Program even if the test is not state-mandated.

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Sell The Property At An Increased Value

The final step is to sell your property once it has been paid off completely and move on to bigger and better things!

We recommend using a real estate agent specializing in selling homes that have gone through extensive remodeling projects like yours.

They must also have experience marketing similar properties because theyll know what buyers want when viewing homes online or touring them in person.

Disadvantages Of Owning A Rental Property

• Responsibilities of being a landlord. Youll have to deal with repairs , collecting rent and, sometimes, difficult tenants. You can hire a property manager to handle most of these responsibilities, but this will cut into your monthly income.
• Selling is not always easy. Depending on market conditions, it can be tricky to sell real estate, especially rental property. And youll need to factor in the costs of a real estate agent and legal fees.
• Routine and unexpected expenses. Owning a property can be expensive. Aside from your down payment and mortgage, what you spend on utilities, maintenance, repairs and upgrades really adds up. Budget 2% of the purchase price of your property for maintenance and repairs. Youll also need a rainy day fund to cover operating costs if your property is vacated and you dont find new tenants immediately.
• Rental income is taxable. Your net rental income is included in your taxable income for the year. Whats more, this extra taxable income might make you subject to a higher marginal tax rate, which would have you paying more tax on every additional dollar earned. The rental income could also reduce your entitlement to government benefits such as Old Age Security.

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Real Estate : Investing In Houses For Beginners

As a real estate investor, you might often wonder how you can make huge money without much work. If you want to learn about investing in houses and how it can help your situation, keep reading.

Real estate is the only investment that grants enormous freedom to the investor. One cannot buy gold and keep it locked in a vault similarly, you cannot buy a house and lock yourself into it, forgetting that it has value. You must know how to buy real estate and how to manage it.

Even if you arent ready to start your investment yet, this article will help you better understand what is involved in real estate investment trusts. Lets get started.

The Big Picture Property Investor

As youve seen, there is a lot of data to filter through. While youre examining it, keep in mind the macroeconomic factors such oil prices, trade deals, interest rates, key industry growth, new construction levels, and what the top business needs of each city are. What drives the local economies? Who are the major employers?

2022 is definitely a year of keen interest in the best cities for property investors.

Enjoy your research for the best places to buy rental property. Its a major pursuit of landlords and even property management companies are now buying rental properties.

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Get Renters Who Can Provide The Security Deposit

If the tenant is satisfactory, youll need to get an adequate security deposit.

• Depending on the customs in your marketplace, that may be represented by a flat fee security deposit, or an amount equal to a certain number of months rent.
• Youll need to obtain the security deposit, along with the first months rent, before the tenant moves in.
• The money should be held in an interest-bearing trust account specifically for the tenant and used to pay for either damage to the property not repaired by the tenant, or unpaid rent. Otherwise, the deposit will need to be returned to the tenant, with interest, within 30 days of vacating the property.

The security deposit also serves as a qualifier. A tenant who has the ability to pay both the security deposit and the first months rent is likely qualified. But if a prospective tenant doesnt have the money upfront, its a tip that they may be experiencing a cash flow problem that you wont want to deal with going forward.

Another alternative is to purchase rental properties through an online real estate marketplace like Roofstock. Not only can you purchase certified rental properties through the platform, but, as I mentioned above, you can also purchase homes that already have tenants in them. That means youll be purchasing a property that already has an existing cash flow. It will at least give you a break on tenant screening upon purchasing the rental home, though the process will be ongoing each time a tenant vacates the property.

Get The Advice Of Experts

• Assemble a team of professionals to advise you on real estate, legal, tax and financial decisions. Getting the right advice upfront could save you money in the long run.
• Because buying rental property will be an investment, consider including an investment advisor on your team as any property you buy will impact your asset mix and overall portfolio.

Once you find the right rental property, consult an investor mortgage specialist to discuss your financing options.

The content of this publication is provided for informational purposes only and is not intended to provide specific mortgage, financial, investment, tax, legal, accounting or other advice for you, and should not be relied upon in that regard. Readers should consult their own professional advisors when planning to implement a strategy. This will ensure that individual circumstances have been considered properly and that action is taken on the latest available information.

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Real Estate Investing Can Be Taxing

You may not have to analyze a companys finances or spend your weekend reading financial news to be a successful real estate investor. But dont think its a walk in the park. If you own property, youre in charge of maintaining and repairing it, not to mention paying property taxes, insurance, and the mortgage. And things could get rough if you rent property to troublesome tenants.

Hire A Property Manager

Being a landlord can be more time consuming than it might appear. Finding and screening tenants, collecting the rent, and taking care of repairs are only some of the duties required for successfully managing a rental property.

Owners also need to comply with local and state landlord-tenant laws, the Fair Housing Act, conduct periodic property inspections, run regular rent comparables, and obtain the best prices from qualified vendors to help keep operating expenses under control and rental property returns growing. New investors can learn how to be an effective investor and landlord by attending the Roofstock Academy— a training program specifically designed to help real estate investors succeed.

Those who are not interested in — or simply dont have the time to dedicate to being — a landlord often hire a local property manager. Hiring a property manager may allow an investor to enjoy the benefits of owning a rental property while avoiding the hassles of being a landlord. The best rental property managers take care of day-to-day details so that investors can focus on growing passive income streams by buying rental property in the best markets for the best returns.

You can find recommended property managers through Roofstock. All Roofstock Preferred Property Managers are carefully vetted to examine:

• Necessary license in good standing
• Historical portfolio performance
• Length of time in business
• Reporting and data capabilities

• Depreciation expense

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