In­vest­ing in small towns

Tony Miller

Ottawa Sun - New Homes - - HOMES -

the op­er­at­ing ex­penses for the prop­erty, and the mort­gage terms from your lender.

Lo­cal em­ploy­ment

We’ve all heard the say­ing “lo­ca­tion, lo­ca­tion, lo­ca­tion” when it comes to real estate. For in­vestors, it’s mostly about “jobs, jobs, jobs” be­cause when the em­ploy­ment sec­tor is ro­bust, the rental de­mand is strong. But when there is a lack of jobs, the de­mand for rentals de­creases. Be­fore buy­ing in a small town, in­ves­ti­gate the em­ploy­ment sit­u­a­tion to de­ter­mine what the de­mand for your rental will be and what you can ex­pect to re­ceive in rental in­come.

Team build­ing can be chal­leng­ing

In­vestors know that they need a team of pro­fes­sion­als in their cor­ner when pur­chas­ing or sell­ing an in­vest­ment prop­erty. How­ever, it’s dif­fi­cult find­ing the right pro­fes­sion­als like lawyers, in­spec­tors, mort­gage spe­cial­ists, ap­prais­ers and in­vestor fo­cused re­al­tor in small towns. If you’re an out of town in­vestor, you might need to self-man­age the prop­erty if you’re un­able to find a suit­able prop­erty man­ager in the area. What­ever you do, make sure you have a team in place in be­fore you start plac­ing of­fers or you could run into de­lays or even lose out on the prop­erty.

Exit strat­egy

Plan­ning how you will exit the prop­erty is ex­tremely im­por­tant es­pe­cially in small towns. Do you have strate­gies in-place in case you need to sell or if the mar­ket tanks? Do you have enough rental in­come from other prop­er­ties to ab­sorb losses from this prop­erty? Would of­fer­ing in­cen­tives help fill va­can­cies faster? Can you af­ford to re­duce the rent over a sus­tained pe­riod of time? Would you be open to sell­ing us­ing Rent to Own (RTO) or Agree­ment for Sale?

Buy for cash flow

No, check that…buy for LOTS of cash flow to help off­set the higher va­can­cies, the po­ten­tially higher op­er­at­ing costs, and the longer days on mar­ket when it comes time to sell.

GETTY IMAGES

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.