Are you thinking of buying an investment property? Real estate, whether a single-family home, apartment complex, or place of business, can certainly provide some good monetary returns. However, before you take the leap, there are some questions you should ask yourself. Here’s what to consider.

Type of property

Give some thought to what kind of property you want to purchase and how it will be used. Maybe you’ve always wanted to own and rent out a tri-plex apartment. Perhaps you’d like to own a small commercial building and use one of the units for your own business.

Market conditions

Read up on how properties are selling at the moment in Calgary. Take a look at published information about market trends year-over-year. For example, are homes selling faster now than they were this time last year? Has there been a significant price increase in similar properties, or have prices held steady? The Calgary Real Estate Board is an excellent resource for data, as well as forecasts of future trends.

Capital to invest

What amount do you have to invest, and is it enough? You’re likely to have a mortgage on your purchase. This means that you’ll have to qualify based on the lender’s criteria. Be aware that when you buy an investment property, you’ll generally be expected to have a larger down payment compared to what’s required to purchase a primary residence.

Tax implications

Owning an investment property comes with certain tax advantages. You’ll be able to write off the interest on your loan, as well as various costs associated with renting the property and maintaining the building and grounds. Make sure that you’re ready to keep good records.

Length of commitment

Imagine how long you want to own the property. Don’t expect that you’re going to see a steady revenue stream any time soon. Unless your aim is to buy and flip a home, investing in real estate is usually a long-term commitment. Remember that there are costs associated with buying and selling real estate, so you’ll want to keep your investment for a while.

Ongoing cost

Any building has ongoing costs that you should factor into your decision. Some of these are fairly predictable, like property taxes, utility fees, and upkeep charges. Then again, there are unexpected expenses that will come up from time to time. For instance, repairs to a malfunctioning heating system or to fix damage after a burst pipe could be expensive. Yes, you’ll have insurance but every policy has a deducible amount to be paid. Plus, you may not be able to rent out the premises for a while, and that means more lost money.
Buying a real estate investment can be a tough decision, but it can also be a great one! Give me a call to help you walk through the options and decide if it’s the right move for you.