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

1. Financing, typically lenders will only lend up to 90 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. You will usually get higher rent when your location is desirable and the estate is new or better than the competition.

3. A new home will require little 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 control over the entire property compared to body corporate type properties.

4. It is strongly recommended that a depreciation schedule is prepared for your new investment property to maximize your tax benefits, we recommend and use BMT Tax Depreciation Quantity Surveyors. You will be amazed how many more tax credits you can get with a quantity surveyors schedule.

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, and any monthly maintenance fees if the property is a unit or townhouse.

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 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.

Mark McIntyre is a Professional Real Estate Agent. Mark works and resides in Kirwan, Townsville. He specializes in helping people sell and buy homes in the Townsville area. You may use his website to find real estate information when you are buying or selling a home in Townsville.