Before buying any Vancouver income property, you need to look at the rent you could charge. Would you be able to cover your expenses? Or make a profit? Figuring this out will allow you to assess if you should buy a certain Vancouver income property. Not sure how to make this assessment? Today we will teach you the way to do it!
The costs of your Vancouver income property
The first element you need to look at in relation to your potential Vancouver income property is expenses. Make a list of all the expenses you need to consider. Here are a few items to get you started…
1. Down payment
Think about the size of the down payment you will be making. Remember that the more you put down, the smaller your mortgage will be.
How much will your mortgage be per month? Be realistic about this. Do not think you are going to get the best rate ever – and remember that you may need to refinance down the road.
3. Renovation costs
Is the Vancouver income property in ideal condition or will you need to do some work to it? If so, how much will this work cost? And how many months of work will be required before you can put your rental on the market?
4. Condo fees
This is not relevant if you are considering a house. If you are looking at a condo though, strata fees are a major expense that you need to factor in. Also, keep in mind that strata fees can change on short notice.
5. HOA fees
Does your potential Vancouver income property have a Homeowners’ Association? If it does, then what are the fees?
The first question you need to address is whether you will be paying for utilities or your renters will be paying them. You may also want to look at paying some utilities and having renters handle others. No matter what you decide, if you are paying for any utilities, make sure you factor that into your rental equation.
Does the property have a parking space? If not, is there a close-by parking spot that you are going to purchase?
If you are looking at a condo, will it have a storage locker or do you need to buy one separately? If you need to buy one, make sure to look at what this will run you.
Are there any extras you want to offer at your Vancouver income property? For example, you may want to rent the place furnished or provide internet. If so, make sure to factor these elements in too.
Calculating the rent for your Vancouver income property
Once you have your expenses calculated, the next thing to consider is the rent you could charge for your potential Vancouver income property. The first step to figuring this out is doing your research. Look up similar properties in the same neighbourhood. Now make a list of the prices. Average these prices out and look at the number you end up with. This is approximately the going rate for that neighbourhood and should tell you what you could rent your Vancouver income property for.
Making a decision about your Vancouver income property
So is this the right Vancouver income property for you? Take a look at your expenses and compare them to the going price for similar units. The first thing you want to figure out is if all your expenses could be covered. If not, walk away from the property – it is going to be a money pit.
If you are looking at a huge profit, fantastic! You may want to jump on this property because it sounds like you have scored yourself a deal!
Most of the time, though, you are going to be looking at a number in the middle – with some profit, but not a huge amount. So now what? You need to consider if the profit is enough to make the process worthwhile. This is where one last factor comes in… your time and effort. What is your work worth? How many hours are you looking at to manage your Vancouver income property? Look at the amount of profit you are looking at per month and divide it by the number of hours you think you will need to work. Compare that number to your time’s worth. If the amount is higher than your worth, this could be the right investment property for you. If not, wait and look for another option. Remember that there is no need to rush – take the time you need to find the perfect property and do not rush into anything!
Thinking of renovating your Vancouver income property? Make sure you know what renovations appeal to renters! Already have renovations in mind? Get in touch with us to get started on your project!