What to Look for in an Investment Neighbourhood

Successful real estate investing means being on the constant lookout for the right opportunity. Unlike your primary residence property, it’s about more than finding a beautiful home in a prestigious neighbourhood. Everything boils down to what will appeal to the right tenant, and emotions cannot influence your decisions. 

All that matters is that the numbers show that a property has enough growth and income potential to make the purchase worthwhile. What makes for a great investment opportunity? Think of the demand from prospective tenants, the cost of the property and the potential for positive cash flow. With all these things considered, location becomes a critical factor. These tips will help lead you to undervalued properties with exceptional potential.

Defining a High-Value Tenant

In the current market, fewer people are buying homes. As a result, more people than ever are renting. The key to maximizing your success as an investor is your ability to identify and attract a high-quality tenant. Here are a few of the qualities you should look for:

• Someone who can (and will) pay their rent on time every month. A high income helps, but it isn’t the only factor. 
• Don’t judge by income alone, but by how well a prospective tenant manages their money. Damage to your property will add to your expenses and devalue your investment. It’s important to find someone who will take care of the unit and maintain it like it was their own.
• A tenant who is amiable by nature and capable of living peacefully with their neighbours. Disputes inevitably arise, but constant conflict can turn your investment dream into a massive headache.
• Generating a positive cash flow can be difficult if there’s a high turnover and the unit is vacant for long periods of time. This problem is eliminated by establishing a relationship with a tenant who will stay for the long term.

There is no one profile you can rely on to identify a high-value tenant. The right person could be single, married, or divorced. They could be a family, roommates, a child-free couple, or even a university student. When it comes to selecting a tenant, the old adage holds true; don’t judge a book by its cover.

Many high-income individuals live far beyond their means and end up in financial hot water. On the other hand, a single parent may earn less but have a far better understanding of the value of a dollar. 

The key is to run a thorough background check and vet each potential tenant thoroughly. 

Getting the location right matters, but there are other things to consider when buying an investment property. The articles below will help fill you in:

• Is now a good time to become a real estate investor?
• What Can You Buy in Etobicoke for Under $1 Million?
• Why Working With a Local Etobicoke Realtor® Is More Critical Than Ever 

Proximity to Schools

When choosing an investment property, you always want to consider how much appeal it will have to attract the type of person you’re looking for. The proximity to schools is one of the most desirable features for a high-quality tenant. 

Researching the neighbourhood to see where the best schools are located takes only a few minutes. Still, it can help you enjoy a higher level of success with your investment. 

For example, many parents use the Fraser Rankings to determine the best schools for their children. If you go to www.compareschoolrankings.org, you can type in the name of any city to find the institutions that have the best ratings. For example, Lambton Kingsway Junior Middle School is ranked 9 out of 10, making it appealing to anyone with a school-aged child. The neighbourhood of Sunnylea is just six minutes away, which may represent a fantastic opportunity for investors!

The Mimico neighbourhood is another prime area for investors because of its proximity to Humber College, which has a campus in Etobicoke. College and university students are often excellent tenants as they typically need accommodations for the duration of their studies, which could last three to four years. 

In any case, you can never go wrong by noting what schools are nearby when evaluating the value of a potential investment property. 

Do you want more information on Etobicoke’s top schools? Check out our database right here.

Invest in Areas Expected to Surge in Price

There are several reasons that could make 2023 one of the best times for savvy investors to pick up new income properties. The rental market, like real estate, is driven by supply and demand, and the need for housing has never been greater. Rising interest rates and inflation have caused many people to put their home buying plans on hold for the foreseeable future. Add that to the fact that Canada has raised its immigration targets, and we can expect the rental market to surge. Many units already have long waiting lists from hopeful tenants. 

For investors, the window of opportunity is perfect. Real estate prices are down, but expected to rise again quickly as the population grows and more people make their way to the GTA. Getting in now means a lower barrier to entry because a smaller down payment is required.

Sunnylea and the Queensway are just two Etobicoke neighbourhoods teeming with potential investment opportunities.

Do you want to know more about the neighbourhoods of Etobicoke? You’ll find our collection of guides right here.

Teardown and Rebuild Properties

Etobicoke is constantly under new development. Everywhere you look, newly built homes and modern condos are popping up. However, many neighbourhoods still have older, rundown homes that are prime opportunities for investors. 

Instead of buying to renovate, many people choose to tear down and rebuild completely. The upfront cost may seem high, but is well worth it when you consider the effect on the income potential and long-term equity growth.

When looking for a teardown opportunity, here are a few things to keep in mind:

• Old rundown homes may not look appealing, but you can often pick them up at a much lower cost.
• Rebuilding can be expensive, especially with the rising cost of materials and labour. Be sure to run the numbers carefully before committing to a purchase.
• This is not the same as house flipping! Flippers typically make a few cosmetic improvements in the hopes of turning a quick profit. Teardowns and rebuilds are long-term investments that require focus and commitment.
• Be careful of the zoning laws. Some bylaws are far more stringent than others.

Your best bet is to find a small home on a larger-than-average lot with a single driveway that you can purchase at a steep discount. It may seem like a tall order, but an experienced real estate agent often has access to those hidden gems that are just right for you.

Are you ready to begin the search to find your next investment property? We help investors at all levels pinpoint the locations that pay off the most in the long run. We are happy to answer any questions you have with no obligations. Reach out to us today at contact@thompsonsells.com or call 647-282-7653 to get started.