Buying a multi-residential property in Great Toronto Area means making a multitude of decisions. The bigger the property, the more decisions you’re going to have to make. It’s a big responsibility to go the multi-res route, but it’s one that can pay off big time if you adhere to advice, plan accordingly, do your research, and have a strong commitment to making it work.
While location plays a huge factor in how successful the multi-residential property will be, there are several other factors that play a part, and considering them is only going to increase the chances that your investment will pay off.
Choosing a location
As location plays such an important part, let’s take a look at it first. You can buy a multi-residential property almost anywhere Hamilton, Barrie, Kitchiner, Toronto, so how exactly do you choose the right one? There are several questions to ask yourself before you delve into the details.
- Do I want a multi-residential property near where I live?
- Who will manage the property?
- Am I buying the for short-term or long-term rentals?
- Will I live on site?
Those are only just some of the questions to ask yourself in terms of location, but they’re vital in terms of your decision.
There are those who feel more comfortable having their multi-residential property close by rather than across the country or even a few towns over. However, the biggest factor is whether or not you want to manage the property. Typically, if you want to manage the multi-residential property, the closer you are the better, and usually no more than an hour away is ideal. This allows you to get to the property as quick as possible should a situation arise. However, if you’re going to hire a manager to care for the property, then you can have one anywhere you desire as long as you hire someone you can trust.
Next up is to consider whether you want to use the multi-residential property for short-term or long-term rentals. What exactly does this mean? Well if you’re buying a property with the idea that you want to use it for short-term rentals, such as renting apartments out to tourists, and then it should be in a location that appeals to them, such as near a popular beach or attraction, not in a tiny town in the middle of nowhere. If you want to use the multi-residential property for long-term rentals, than it’s best to choose a building that’s convenient to jobs, retail, and schools, and that’s easy to get to, but not necessarily in a location that appeals to tourists. Should you want to use the multi-residential property for both, then choose a building that’s relatively near a popular site or attraction with plenty of conveniences nearby as well as job opportunities.
Another factor is whether or not you want to live on site. In this case, you not only have to choose a multi-residential property that’s where others want to live, but where you want to reside as well.
What to consider in a multi-residential property
As stated, location is incredibly important, but there are other things to consider as well. For example, is the area one that will appeal too many? Are there good schools nearby? How is the job market? Is the multi-residential property close to transportation, but not so close that it’s going to interfere with the daily lives of renters? What are the occupancy and vacancy rates in the area? These are only just some of the factors that potential renters will be considering when they’re looking for a new place to live, which means they need to be important to you as well.
How to find a property
If you’re interested in buying a multi-residential property, start by reaching out to a landlord association in your area. They can give you all the info you need on how to get started, the rules and regulations if you aren’t already familiar with them, and what areas are excellent to consider.
Once you have all the info and you’re ready to go, contact a real estate agent who can get you closer to buying the multi-residential property you desire. Depending on whether or not you’re going to live on the property, they can give you the best options in your price range.
Physical characteristics in a property
You don’t want a multi-residential property that’s going to cost more for repairs and upkeep that you ever could have imagined, which is why the newer the property, the better. The building should be in excellent physical shape, which a reputable inspector can attest to, and be comprised of brick and a solid foundation. Depending on the climate where the multi-residential property is, heating and/or cooling units are also going to be a huge factor.
People to have on your side
You can’t expect to run the multi-residential property on your own. You’re going to need a good team to have on your side other than a property manager if you choose to go that route. For example, you’ll need a handyman, plumber, locksmith, and electrician, all of whom need to offer 24-hour emergency service for the multi-residential property. You’ll also need a real estate accountant, real estate lawyer, banker, and landscaper.
Looking at finances
When you’re buying a multi-residential property, it obviously shouldn’t be a money pit. You don’t want something that is going to leave you in the red every month. For example, the building should cover all the interest and mortgage costs and pay for all the expenses. Ideally, the multi-residential property should cover your living expenses as well, and definitely do so if it’s your main source of income. You should also factor in if there’s ways to make the property even better over time, such as by adding a gym, which can allow you to make more money in the future.
Keep in mind that the more you’re going to charge for rent at your multi-residential property, the more expectations are likely going to come with that in terms of service of the residents and the property. Those paying high rent expect to get their money’s worth, preferably sooner than later, which means everything is going to have to be exemplary at all times and repairs need to take place almost instantaneously. Slack and you run the risk of tenants moving out, and negative word-of-mouth about the multi-residential property from preventing many future potential residents from moving in.
If you want to buy a multi-residential property, the two keys are patience and research. The more time you put in to finding the perfect property for you, the more likely you are to be successful. If you rush the process, that’s when you run the risk of it being a detriment.