If you wishfully sigh while reading the success stories of people making money off rental property, you are not alone. As Toronto’s popularity continues to rise, many people are actively looking for ways to get in on the action. While the escalating real estate prices are a great news for those already owning a rental property, it could spell trouble for those who have not tested the market yet. If you are wondering how to monetize a rental property, here are a few stellar tips to help draft your rental property investment strategy.
Increase Your Down Payment
You must be familiar with the fact that you need a 20% down payment when buying an investment property. However, if you want to make the most of your investment properties, it pays well to put down as much as you can. Consider increasing your down payment if you can manage it. Paying more up upfront can seem to weight heavy on the pockets at the moment but trust me you will gain back the difference in equity gains over that first year, even more. Another benefit of a bigger down payment is that it cuts down on your margins and lowers your monthly mortgage payments.
Peruse The Resale Market For An Investment Property
Up until 2019, investing in pre-construction condos was considered a pretty lucrative way of monetizing investment properties. However, with pre-construction condo prices paralleling their resale counterparts, it’s more financially prudent to look to the resale condo market when considering buying an investment property. The cost of new condo projects in any neighborhood is far exceeding what the current market is trading for. If you are buying property solely for investment purpose, buy a condo with a good price per square foot and take care of your mortgage payments with the rental income your property generates.
Purchase An Unoccupied Property
Remember that buying a tenanted property means that you will have to honor the lease of the existing tenants. However, if you are looking to rent out your investment for a competitive price, never buy a tenanted property with a lease agreement in place. If you are looking for unoccupied properties, the seasoned real estate investors at Toronto Condo Team can help you find the most promising property.
Look To Emerging Neighbourhoods
If you want to amp up your profit margins off a rental property, look up condos in up-and-coming areas that are revealing signs of gentrification. It’s better to buy into an area that may not be as desirable right now but offers a significant cost difference as compared to other neighborhoods. This way, your property will yield great profits whenever gentrification occurs. For instance, Toronto has its fair share of underdeveloped areas along the subway eastbound where the prices are projected to soar sky-high over the next few years. Keep your eyes open for all such investment opportunities and never lose sight of the bigger picture.
Buy A Condo Assignment
While you should never buy a pre-construction condo and sell it on assignment, you would be wise to purchase a Toronto condo on assignment. An assignment is when a buyer purchases a pre-construction condo and sells their agreement with the builder, even before taking possession, to a new buyer. If you are buying a property solely to garner rental income, buying an assignment means that you get a condo for far less than the market value, since the common spaces and amenities of the building are not yet completed. You should also keep in mind that brand new condos are exempt from rent control.
Focus On Long-term Gains
If you are looking to make money on a rental property, you need to look at the bigger picture and your investment strategy should also be geared towards long-term gains. Equity gains are what’s important when we talk about the Toronto real estate market. Don’t be too hasty to sell your investment property for quick profits. Remember that the longer you hold on to your investment, the higher your equity. Looking at the steep year-over-year rise in condo prices, the equity gains are exceptional. Not to mention, you are already earning from rental property income on the side. Hold your investment property for at least 5 years to see a spectacular ROI.
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