Rules for real estate investing

With interest rates sitting at record lows, it's never been more affordable to add a rental property to your investment portfolio. But is becoming a landlord right for you? 

1. Are you entrepreneurial-minded?
While buying a rental property may seem like straight-forward endeavour, it is, in essence, a form of self-employment. As such, you will have to be able to do the math (to ensure your investment is profitable), know the tax implications, acquire appropriate tenants, and hire the right property manager (or manage the maintenance issues yourself). A lot more work than simply finding a tenant and collecting the rent!
2. Does it make financial sense?
In order for a rental property to be profitable, you have to make sure that it will generate a steady monthly income - after mortgage and operating costs - and eventually appreciate in value. That means buying in an expensive market like Toronto or Vancouver may not make as much sense as a smaller market such as Kitchener, Ontario where property costs are lower. The key is to look for an area that has increasing job and population growth.
3. Is it the right time to buy?
If you're approaching retirement, an investment property may not be the best option for you. The same holds true if you're just scraping by - and if your property will start losing money should interest rates rise. As with all real estate, you should view investment properties as long-term investments - giving them plenty of time to appreciate in value, and less vulnerable to interest rate hikes. To find out if now is the right time to by, it's worth talking your decision over with me, or your financial advisor.