This is it! The year that you’re going to purchase a condo unit as a rental property and grow your real estate portfolio. And investing in a condominium is a great asset to invest in. Unfortunately, investing in a second property isn’t as simple as purchase and see rewards.There is a lot more into purchasing an investment condo unit than, “this one will do.” From how are you going to manage the unit to whether the condo building itself is in a great rental area, we’re here to guide you through some of the common mistakes people make when investing in a condo unit for rental purposes.
b. Market research: what are other condo units in the area selling for, both in the building you’re looking at, but also in the neighbourhood.
c. Management: who is going to manage the unit? Do you want to be responsible for sourcing quality tenants and collecting their rent? If yes, then great. If not, then look into reputable property management companies to understand what this relationship entails and how this will impact your life.
2) Mistake 2: Avoiding the condo bylaws
This is crucial as some bylaws will not allow you to rent your unit. If you are investing in a condo as a rental property, clearly understand the bylaws ahead of time and make sure that you can rent and what the conditions around renting are. For instance, you may be able to rent to a long-term tenant, someone who is staying more than six months, but not to short-term stays through companies such as AirBNB. Make sure that you’re goal with your condo property aligns with what the bylaws allow.
3) Mistake 3: Buying only based on price
When you buy based on price alone, you limit yourself and most likely won’t see the return on your investment when you’re looking to sell in the future. Rather than thinking, “I’m going to buy a condo for X,” determine:
Each of these points will help you get clear on why you’re looking to invest in a condo, where you’d like to invest, and whether or not the building you’re investing in is actually a good building to stand behind. You could have a steal of a deal in a condo, but if other factors aren’t considered prior to purchasing, you could be the proud owner of a condo unit that nobody wants to rent.
4) Mistake 4:Not reviewing the condo corporation’s Master Insurance Policy
Think you are going to invest in a condo, gut it out, renovate, and then rent it? This is perfectly fine so long as you understand what is now actually covered in your unit. For instance, many condo corporations have insurance to cover the base units of their building – how the condo unit was after the condo developer finished. If you go in and make improvements or betterments to your condo, such as adding in hardwood floors or surround sound in the walls, you may need to get an insurance policy that covers these updates so that your investment is properly protected.
5) Mistake 5:Investing with emotion, not with logic
When you purchase a property to live in, it makes sense to purchase based on emotion to some degree. After all, this is your home where you’ll be creating memories. However, when you’re looking at investing in a condo property for the purpose of having a rental property, it’s important to remove emotion. Stay emotionally detached from the property and use more objectivity when deciding what type of condo to invest in. Don’t be heartless, but understand that this is purely a real estate transaction where you’re looking to increase the value of your asset portfolio.
Investing in a condo unit for the purpose of having a rental property is a great idea, where you can reap rewards down the road. If you take the time to understand what makes a great rental condo, along with you want to get out of your condo unit, then your investment will help you achieve your real estate goals. If you’re interested in starting your research about what purchasing a condo unit is like, then contact Catalyst Condo Management. We’re always here to listen, guide, and help educate on this ever-changing industry!