7 Critical Considerations for a Real Estate Investment Property Purchase

If you are considering an buying an investment property, there are 7 important items to consider.

1. Financing, typically lenders will only lend up to 65 percent of the value of the property when it’s for investment purposes. This limit is in place because lenders consider an investment property a higher risk

If you have equity in your current principal residence or in other property, then you may wish to borrow from those sources to maximize your mortgage and financing Generally speaking your investment property. The reason for this objective is because you are allowed to use mortgage interest paid on your investment property to reduce the amount of income and hence tax paid on your investment property.

2. Another important consideration for your investment property is choosing the best location. If you are considering a townhouse or a high-rise condo for your investment, then you want to ensure that it is located close to major shopping, transportation and schools and amenities that will appeal to prospective tenants. Often tenants will only have one vehicle and require these types of amenities to be located close to the property. You will usually get higher rent when your location is desirable.

3. Generally speaking, a high-rise condominium will allow you the most flexibility and least amount of effort and maintenance during the tenancy compared to any other type of property. Once a high-rise condo is rented, it is nearly a hands free investment. This does not come without any cost, as the maintenance fees associated with a high-rise condo will be much higher compared to a townhouse or other type of property. Your second choice for maintenance free investment property may be a townhouse. The reason is that all of the exterior maintenance, such as snow shovelling and lawn and garden maintenance will be taken care of by the condo corporation and not the tenant. The only items that you and/or the tenant will have to take care of are the interior items and these are usually minor in nature.

A freehold townhouse, semi or detached home will require more maintenance and effort on your part and the tenant throughout the year. This may be more desirable or not, depends upon your circumstances. Many investors choose freehold properties for their investment properties as they have the time or prefer to do some of the maintenance themselves or at least have control over the entire property compared to condo type properties.

4. As a continuation of the items considered in number 3, these different properties will appreciate at different rates, all things being equal. For example, if a high-rise condo has an appreciation of 10% in a year, then a townhouse may appreciate 12 to 14% and a freehold property may increase 15% or more. This larger appreciation would be offset by the fact that more maintenance may be required by you the owner.

5. It is important to consider all the expenses when you purchase an investment property. The obvious expenses are the principal and interest costs associated with the mortgage or financing on the property, the annual taxes and any monthly maintenance fees if the property is a condominium.

You may wish to consider regular maintenance items to protect the value of your investment property and the systems that are associated with your property. Other expenses you may incur are regular maintenance items such as furnace cleaning and maintenance and inspection. This is a very important item if your investment property is a freehold. Other items such as the condition of the roof, foundation, interior and exterior walls and windows, appliances, lighting and window coverings, electric garage door openers and any other systems or items that are mechanical in nature should be checked on a regular basis to not only protect the value of your investment but also to prevent the failure of these items as opposed to regular maintenance.

6. Once you have purchased your investment property your other major consideration is finding a good quality tenant. In my nearly 20 years of experience I have found that there are two major considerations in your tenant. The number one consideration is that you find a tenant who has the ability to pay the rent and if possible can show a good history of paying the rent. The second most important item is to make sure that your tenant will take care of the property for you in your absence.

Other items you will have to consider are that you must investigate the credit worthiness of the tenant, their personal and credit history, their employment status and confirmation of employment. You may contact their previous landlord and personal references that they supply on the application. These items can be critical and will give you insight into your prospective tenant. In my experience, the degree to which a prospective tenant completes all fields on a rental application and provides all the information you request and is straightforward and forthright with all answers to your questions and inquires will give a good indication of the quality of the tenant that you are looking at.

7. You have to decide to find the tenant yourself or use a real estate agent. When you attempt to find the agent yourself, you can personally meet the tenant ahead of time and see the type of people that will occupy your property. You will have to do all the credit and personal investigations of the tenant. I have found that when you use a real estate agent to find a tenant for your property, the quality of the tenants are usually better than through private means. The reason for this is that tenants who are relocating with their company or those tenants that have better employment and personal history know that the properties on the mls are better compared to the private properties and will utilize the mls to find their property. As well, the mls is a much more efficient method of finding a rental property and many tenants use the mls to find their next rental.

Of course, a real estate agent can find you a good quality tenant and perform all of the credit and personal investigations on your behalf. In the Toronto and GTA, the typical fee to have your property rented through the mls is one months rent commission.

Conclusion

As you can see, there are many important items to consider with an investment property that you are considering to purchase. Your personal situation, financial ability and degree of involvement in your investment property will ultimately determine the type of property that you will purchase.

The ARTE Condominium – Luxury Penthouse, Homestay & Investment

The ARTE is a premium luxury condo with penthouse suites located at Thomson Road.

Its smallest unit are 2 bedrooms and the largest units are Penthouses.

To get around town, the nearest MRTs are Novena and Toa Payoh. The Arte is a 16 minute drive away from Singapore’s shopping belt. This allows the developer to price this luxury condo at an attractive rate. A luxury condo such as this built in the city would be over budget for most.

The ARTE has 2 blocks, blocks 21 and 23.

Here’s a break down of the units available.

2 Bedrooms Size = 1055sqft

3 Bedrooms Size = 1625sqft

3 Bedrooms = 1528 sqft

3 Bedrooms = 1399 sqft

4 Bedrooms = 1873 sqft

Next, we have The ARTE’s luxury penthouses.

Penthouse

There’re a few types of Penthouses available, all of which are fairly priced. If you pay more, you get a suite that is on a higher level and bigger.

Penthouse type PHD = 2896sqft Double Storey. Total 8 units

Penthouse type PH1 = 2648sqft Double Storey 2 units

Penthouse type = PH2 2680sqft 2 units

Penthouse type PH3 = 2820sqft 2 units

Penthouse type PHG1 = 4015sqft 2 units

Penthouse type PHG2 = 3810sqft 2 units

The best suite is Penthouse type PHG1, a 4051sqft luxury penthouse. It has 3 stories, inclusive of 1 roof garden. One good thing about this penthouse is the junior suite on the 1st floor that has its own bathroom. Going up and down the stair case is difficult for senior citizens. This extra room is good for families that have elderly who find it more convenient staying on the ground floor.

Popular Units

– if you’re family oriented with 2 children seeking homestay, the popular units are the 2 and 3 bedrooms types located from the 19th storey to 30th storey. These units offer the best blend of view as well as size. Savvy investors also know these have high rental yield and will snap these up quickly

– if you have parents living with you, then consider the 4 bedrooms. The ARTE has some spacious quarters here that will not disappoint.

Important Tip:

Popular units are often snapped up quickly. Smart buyers often try to find out when the private launches are because the best units are transacted, bought, sold in real time before the actual launch. If you are privy to this information, you can sometimes get the best units at a cheaper $10-$25 psf, which can add up to paying $40,000 less for your favorite unit!

Closing Thoughts

The ARTE is popular amongst families that are looking for homestay because of its fair blend of mix between price, location, luxury feel. If you like cluster homes, a good condominium such as THE ARTE can more then easily hold its own against the luxury cluster homes of Singapore. The penthouses here are pretty amazing, if you are searching for a high quality premium penthouse, be sure to learn more about this luxury home at PropertyShowrooms.sg

Condominiums Can Be a Great Investment

For anyone thinking about investing in a condominium or a complex, consider the following rules to consider before doing so. Whether a residence or an investment, it pays to go by these rules.

The Rules of Condominium Purchase

• Don’t forget carrying costs

• Never rush into a purchase

• Buy at the right time

• Bargain prices may have high maintenance fees

• Always make a low offer

• Be careful buying during preconstruction

• Consider the physical facts

• Take into account future resale and demographics

These rules will give the buyer knowledge necessary for the size and type of condominium or unit offering the most on resale value. Investors save thousands and avoid ending up with an undesirable unit. For those that have previously owned a condominium unit, these steps will help them learn more so they can make an even better deal next time they buy. One can never have too much knowledge.

Never Rush – The Most Important Rule

It’s easy for someone to buy on impulse, especially if the condominium is presented in a very pretty package. However, most often when people fall in love with a good-looking investment and purchase on a whim without taking all the necessary steps to make sure it’s a great deal, they find out what issues the item has later.

This holds true for property as well, don’t end up with a “lemon.” Take the time to have inspections, get a good look at all the details, and consider everything from location, to condition and possible future value. The time spent before making an offer will make a huge difference not only in the amount offered for the unit, but also the satisfaction with the purchase overall.

Many investors that succumb to rushing to buy a condo unit are victims to:

• The excitement of owning a great unit

• The thrill of being a landlord

• Problems with important units within the property

• Sales pitch pressure and empty promises from the seller

• Not being prepared for all the issues that come with property ownership.

Taking time to go over all the benefits and possible issues before making a commitment to such a huge financial investment is smart. Take a breath and slow down, so that the real estate brokers’ or developers’ need for quick income and a crafty sales pitch don’t result in a less than wise choice.

Trust instinct and make personal decisions without the input from outside sources other than the property inspector. Just because the realtor is working for the buyer doesn’t mean they aren’t partners with the seller as well. By following the above rules, this will allow for a smart decision. It will also help the buyer develop skills necessary to make educated choices that will guarantee great transactions that are a true investment that will pay off in the end.

There are plenty of resources out there to obtain from libraries, homeowners associations, and other experts. Jump online if anything and get some information to guide on this exciting purchase. With the wealth of information at one’s fingertips, there’s no reason they can’t make a condominium investment that will be a real money-maker for them.