How to find a perfect rental

Over the past few years I’ve had the opportunity to speak to a number of people either looking to start their journey in real estate investing or have bought a few properties of their own with some success.

The conversation tends to go the same way with the same questions being asked, however, the same question always comes up

How do you find the perfect rental property?

Seek advice from other investors

Make sure you are getting solid advice from people who have accomplished what you are trying to do, not from broke family members! You will be surprised by how many well-meaning people are eager to give you free advice on something they know NOTHING about real estate investing.

Read & Educate yourself

I am a big fan of reading. If you’re not reading and educating yourself, you are really missing out. Your job will be to read enough material to begin seeing patterns and to form your own opinions and strategies.

Consider Investing in Education

There is a TON of quality content out there; however, just like any other industry, there’s also plenty of snake oil salesmen peddling get-rich-quick schemes, so be careful. Usually, a thorough Google search will help sort out the bad apples.

Learn the market

I recommend buying in an area that you are familiar with, at least for your first few properties as you get your feet wet. If you are not familiar with an area, try spending a few weekends in your target market over a period of months. Drive the neighbourhoods, speak to neighbours, property managers, and get a feel for the are and the potential clientele you’ll be dealing type of neighborhood should you ing

Well, each person’s strategy is different, but here is how I analyze properties and scout out neighborhoods:

I evaluate them as one of three categories…

A Class

These are in “pride of ownership” neighborhoods occupied predominantly by homeowners. The houses are typically well maintained with green lawns, tree lined streets, etc.

B Class

This typically has the largest range of product between the three classes. These houses usually serve the greatest number of people within the community and have the largest amount of inventory. I usually try to target a neighborhood where there is a large portion of blue-collar workers and where there is a 35/65 percent ratio of renter to homeowner.

C Class

These are in “run-down” neighborhoods occupied predominantly by renters.


Tips on the Types of Properties. You should be targeting

1.     Buy Below Market

Ha! That’s funny, Jay. Is that even possible? Well, yes, to be honest. I had clients do that just last week. Think of this not only as a way to grow your net worth, but also as a way to ensure your financial security. If you ever have to sell due to an emergency, that 10-20% is going to allow you to lower your offering price to move it quicker. On a positive note, if you don’t have to sell in an emergency, you’ve just made an instant return on your investment.

2.     The rent should be at LEAST 1% of the purchase price.

For example, a $100K home should rent for at LEAST $1000 per month. Not always possible, but you want to make sure that it’s a s close as possible.

For example, just last week a single-family hold sold in Welland for $600,000. How the hell are these investors going to be able to make that property cash flow. Exactly! They’re not.

3.     Do your due diligence regarding repairs before buying.

If the repairs plus your down payment exceeds 15% ROI, move on to the next property.

4.     Maintain six months of cash reserves per property to pay the debt service.

This should suffice for any unforeseen repairs or vacancies.

With interest rates at historical lows, these next few years will probably be the best time to jump in to the real estate market. Generation Y is three times the size of Generation X and is expected to continue to rent for the foreseeable future—while property values have dropped significantly, costs to rent have not.

If you’ve ever thought about investing in real estate, what’s holding you back? Interested in getting started? Well, Welcome Home can also sell in addition to manage. Give us a call and let’s see if we’re a fit.