Are You Ready To Be A Real Estate Investor?
It's no secret that investing in Nanaimo real estate has been the number one way to build wealth. You know that it's possible to make money in real estate investing, but many people also have more questions and answers.
Here are the answers to the most frequently asked questions about buying a home in Nanaimo as an investment.
Q: Can any realtor help me locate a good rental property?
A: No. In the same way that doctors specialize in a certain field of medicine and lawyers focus on a certain practice of law, you should look for a realtor that specializes in investment real estate.
Q: What makes a good real estate investment property?
A: A good investment property is one that is in a high-demand rental area so you can find good tenants fast, one that is easy to maintain, and one that will be easy to sell when you decide to do so. Both houses and condos can make good real estate investments.
Q: How do I make money with a rental property?
A: There are two ways that you make money with rental real estate - through the monthly net income that you keep after all of your expenses, also known as cash flow, and from the profit that you make when you decide to sell your investment property.
Q: What kind of expenses are there with a rental property?
A: If you finance your rental property you will have a monthly mortgage payment, property taxes, and insurance, just as you would if you lived in the property yourself. Other 'hidden' expenses are routine maintenance and repairs, the negative cash flow you will have each month that the property is vacant, property management fees if you use a professional manager, and one-time expenses such as legal fees if you have a problem tenant.
Q: Is it difficult to finance investment real estate?
A: Financing investment property in Nanaimo is not difficult, but it is best to contact a mortgage broker that specializes in investment real estate. A specialist will know what sources of funding are best. Real estate investors normally put more money down when financing an investment property and a lender may have stricter criteria for a rental property.
Q: Does it cost more to insure a rental property?
A: Just as you chose a realtor who specializes in investment real estate and a mortgage broker who focuses on loans for rental property, you will want to locate an insurance broker who can find a good source of insurance for your investment. The insurance premiums are typically a little bit higher for rental property, since you are not living in the house yourself.
Q: Is it OK to self-manage my rental?
A: Certainly it is OK to manage an investment property in Nanaimo yourself, as long as you like dealing with different types of tenants and you don't mind the possibility of getting a phone call at 2 a.m. from the tenant telling you that the heat has just gone out. Many real estate investors that own just one or two rental properties often choose to go the self-management route.
Q: Do I need a property manager?
A: If you are the type of real estate investor who prefers to be hands off, or if you have more than one or two rental properties, using a professional property management company may make sense. This is because the more rentals that you own, the greater the chances are that something can go wrong - be it an unexpected repair or a problem tenant.
Q: What does a professional property manager do?
A: Property management companies in Nanaimo will offer you a turn-key management solution for your investment real estate. The will market your vacant property, screen tenants, collect the rents, pay the expenses, remit the monthly profit to you, take care of any needed repairs, provide basic accounting and profit and loss statements, remit rental taxes on your behalf, and deal with any tenant issues.
Q: How much do real estate property management companies charge?
A: Some management companies will charge a flat monthly fee and others will charge a percentage of the monthly rent. Remember to ask for references when choosing a property management company, and realize that a company with a cheaper fee is not necessarily the best choice.
Q: Do I need to put together a team to help me with my rental real estate?
A: If you decide to self-manage your Nanaimo investment real estate, you will want to have an arrangement with a good handyman, an accountant, and a lawyer who can advise you on different holding structures for your rental real estate and who can also assist you with legal action in the unlikely event that a tenant needs to be evicted.
Q: How do I know what to charge for rent?
A: First, pretend that you are a tenant looking for a place to rent. You should search the Internet for rental property and - this is a very important step - actually drive or walk around looking for 'for rent' signs and call to find out the asking rent.