16 Jul 2019

4 Things Sarnia Real Estate First-Time Investors Need To Know

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4 Things Sarnia Real Estate First-Time Investors Need To Know

Now is a great time to become a real estate investor in Sarnia. With inventory low, there are not a lot of houses on the market. So, why does that make it a great time to invest? Because people need to live somewhere and houses for rent in Sarnia are in high demand as well. The Sarnia real estate market is booming on every front. And investors who were once looking at large cities like Toronto, are now turning their focus to Sarnia.

That’s because housing costs are cheaper, and there can be a greater profit margin and actual monthly income from buying in a small market. Unless you are flipping a home, investing in real estate is a long-term plan. And, you’re looking to make money from:

  1. Monthly rent
  2. Long-term paying off of the mortgage

Before jumping into investing in the Sarnia real estate market, however, there are things to know about. It takes a lot of money to become an investor. But with the right market conditions and a sharp Sarnia real estate agent guiding you, the right investment property is attainable.

Keep the emotions in check

When you are purchasing a home, your emotions are in full swing. Can you see yourself living in this home long-term? Is it enough room for your kids to grow in? Those are all perfectly fine things to think about as a homeowner. But you’re an investor and investing in Sarnia real estate is a business. So, you need to think like a business person and cut out the emotional ties to the property.

Be upfront with your Sarnia real estate agent and tell them this is an investment property. That way, they are looking for great business opportunities, rather than trying to meet your needs. You’re looking for a great value on a home. Something that will fetch the most rent at the lowest mortgage cost. Don’t get hung up on features and extras. Look for solid homes that don’t need repairs, and keep your mind on your business, not on your heart.

Do your research into Sarnia real estate market

For any first-time investor, they should be doing their research about the Sarnia real estate market. Firstly, that includes the values of homes and the levels of rent for each area of the city. It shouldn’t come as a surprise that rents along Lakeshore will be different than rents in the Sherwood Park region, or closer to Downtown Sarnia. A Sarnia real estate agent will be able to help you with property values in different locations and rental rates for each area.

Doing proper research is what business people do. And you’re a businessperson when looking to buy an investment property. Be analytical in your approach to buying a Sarnia real estate investment property. It’s less about the doors and windows, and more about the location, price, rental rates and financial factors.

Be financially ready for Sarnia real estate investment

“If you build it, they will come” was great for Field of Dreams, but in Sarnia real estate investment, it doesn’t work like that. “If you buy it, they will come” can’t be your motto going in. The truth is, real estate investment can be expensive. So, you need to be financially ready to handle owning an investment property. Remember, this is a business. And, like any business, there are operating costs that you need to pay for. You can have your tenants pay for utility bills, but there are things you could be on the hook for, such as:

  • Home insurance
  • Water heater rental
  • Property taxes
  • Condo fees
  • Unpaid utilities
  • Lawn maintenance and snow removal
  • Repairs and regular maintenance

And that doesn’t even include the mortgage payment you would have to pay in the case that you don’t have renters. You can’t just assume you will have someone renting all the time. So, ensure your finances can cover everything that comes with owning a second house. Calculate all the expenses and costs in owning a Sarnia real estate investment property.

Start on the low-end of the Sarnia real estate market

For first investment property buyers, starting small isn’t a bad idea. Firstly, the mortgage on the house won’t be as high, which also means a lower downpayment. Secondly, you will stay in a safe zone where if things take a turn, you can still afford to carry both houses. And finally, there is plenty of value in low-cost houses, but yet, still get a great return on investment.

You don’t need to buy a $500,000 houses in the Sarnia real estate market to get a return on investment. That’s because with rental rates today, it’s possible to turn a three-bedroom, $200,000 home into positive cash flow every month that covers the mortgage payment and leaves you income left over.

Typically, banks want 20% down for investment properties. So, at $500,000, you are committing $100,000 to your investment. Whereas, at $200,000, that’s $40,000. And your mortgage will be much lower, and more tenants will be in the lower ballpark for rentals than the high-end ones. Once again, this is a business. So, think like a business person and invest in good properties that have a great return. That’s because there is plenty of great return in low-cost houses.

Choose your investments wisely

There are plenty of options to consider before entering the Sarnia real estate market as an investor. After all, it’s not all positive dollar signs and living off your investment. That’s because washers, dryers and stoves break and need to be replaced at your expense. Furnaces need to be repaired during the winter months. Your home needs to be a safe place for other people to live in. And that can come at great cost to you as the homeowner. Add in any renovations, and cost can quickly get out of control.

So, work with a Sarnia real estate agent who knows about investing in Sarnia. Price & Associates Realty works with investors regularly and finds them rental properties that have great value. We look at it from a business standpoint but understand, it’s still a personal choice. Every person puts their emotions in their business, and your investment is no different. So, work with Sarnia real estate agents who have the knowledge to make your investment property dreams a successful one.