The Magic Combination
Ensuring an income property is a profitable one depends on three key factors: numbers, location and bones.
Investment Fundamentals: The Numbers
When the numbers are right, you should have expenses covered or ideally positive cash-flow, especially if the property is not your principal dwelling. There is a lot to consider in this calculation: deposit, mortgage, renovations, taxes, appreciation rates, maintenance, etc, etc. against what you may get in rent. This calculation is extremely important. Along with many other services.
I can help you by calculating the capitalization rate and ROI. I simply recommend to my clients to not do a deal if the numbers aren’t there. I want a long-term investment plan, positive cash-flow situation, and great cap rate % for my clients or I would rather not do the business for them.
Location, Location, Location
As the Greater Toronto Area continues to grow, the value of land increases. It’s often called the spider-web effect. If you can find a property in key city areas, your equity will grow greater and greater as land becomes more and more valuable. And, it’s a bonus when someone else is paying for it!
Location is also an important factor in rental demand. You don’t want to buy a property in an area were people are less likely to rent. Good locations attract good tenants most of the time. I’ll help you choose a location with an abundance of great tenant candidates. Not only is there demand, but you can afford to be picky and choose tenants that suit your property.
I know from experience the best places to buy profitable income properties in Toronto.
It’s often easiest to find an income property that is already divided up into a multiple family dwelling such as a duplex, or house with a basement apartment. However, it is critical to make sure that a building is sound (hopefully eliminating any nasty surprises) and will minimize long-term maintenance costs.
There are also many great buildings out there, especially older ones in central Toronto, that may appear a little run-down or are not yet converted to multi-family dwellings, but have excellent bones underneath. Spotting one of these gems and envisioning potential conversions is a combination of talent and experience. If you are willing to invest a little more up-front for renovations in the right circumstances, you will likely get paid back many-fold down the road.
Through my experience and passion for this, I’m great at spotting good bones and envisioning what properties can become. I also love to connect my clients with the right people to help make it happen.