There are several things you ned to consider when buying a condo for investment purposes including you investments goals, the down payment you have, if you are buying resale or pre-construction, developing areas and much more. As condo investors ourselves and with many satisfied clients we can match your investment goals to the best projects and areas to meet your investment needs. Bottom line is you need a plan!

1. Define Your Investment Goals

   Before you begin your search you must first identify your reasons for investing in residential real estate and fully analyze your financial situation.

   Identifying your objectives and setting investment goals will help you to focus your search. Each time you review a listing or visit a property you should ask yourself would this property meet my fiscal objectives? Some of the specific factors that you should consider are: Neighbourhoods, Rental Market, Economic Conditions, Investment Term.

   Taking the first step means opening your eyes to what is happening in the market around you. You will need to educate yourself on the types of residential real estate available in your city in order to better understand the types of opportunities that are out there.

2. Identify Your Needs and Desires

   There are several key factors you must consider when evaluating your property needs including:

   Location - it is important for reasons different than those that determine where you live yourself. A property may be in a suitable area and may have a good financial picture but you may think, "I wouldn't want to live in this neighbourhood." Well, you won't, but many others will, so don't limit yourself to looking in only those areas that appeal to you personally.

   Appeal and Property Features - Gain an understanding of what property features will increase your rental incomes. Will attributes like parking or in-suite laundry make your bring you higher rents?

3. Know Your Financial Readiness

Before you begin your search for an income property you will need to be clear about your financial readiness in order to understand where and what you will buy. Some key questions you will need to answer are:

- How much money can you afford to put towards a deposit on your income property?
- How much of a debt obligation you are prepared to undertake? What is the maximum that you will be able to borrow?
- What is your net monthly payment comfort level? Set a maximum dollar amount and do not exceed this threshold when searching for properties.

Three key areas to consider when evaluating your financial situation are cash flow, leverage and taxation.

Cash Flow
Create a balance sheet that captures all of your income and expenses to better understand your cash flow and how you will cover all monthly expenses related to owning a residential income property. This will also help you determine where and how much investment capital you can access. List all of your current investments - including your own home, stocks, insurance, etc. - and determine if you should be moving money from areas that are not performing well into your real estate investment.
Determine an amortization and mortgage term that you are comfortable with and realize the duration of your obligation to a lender.

Leverage
Real estate transactions usually involve the borrowing of funds. How much of your own funds you should contribute and how much you should borrow varies in every situation. Leverage rises as the ratio of debt to equity increases. Educate yourself on the basics of leveraging and seek professional advice to ensure you understand the implications of borrowing, interest rates and both positive and negative leverage.

Taxation
Tax liability applies to income properties in two areas: taxation on operations (the rental revenue) and taxation on profits from sale. However, real estate can have many tax sheltering opportunities. A chartered accountant or taxation lawyer will be able to advise you on the tax liabilities and tax shelters that apply to owning an income property.

4. Establish a Relationship with a Lender

The rapport that you establish with a lender is key to your future financial success in real estate investing. When looking for a company or individual to handle your mortgage there are several points you should know:
Ensure that your lender has experience with residential income properties and be sure you clarify how much of a property's income they will consider when determining your eligibility for a loan. Gain a comfort factor by inquiring about how this lender has dealt with other clients in similar properties. Whenever possible make personal contact with the decision-maker directly at your lending institution.

Learn about the differences between banks, trust companies and private lenders.
Educate yourself on the different types of mortgage products that are available in your area (fixed rate, variable rate, open vs. closed, etc.)
Understand what other products your lender has available such as chequing accounts, on-line payment options, line of credits, etc.

Shop around for comparative lending rates and make sure that your chosen lender is competitive.
Find out in advance what the penalties will be for an early discharge of the loan. Also find out about prepayment privileges, payment doubling and other mortgage features. Ask for a copy of the terms and conditions and be sure that you read and understand all of them. If you don't understand something ask to have it clarified.
If you are dealing with a mortgage broker, find out what their commissions are in advance and who pays them.
Develop a bond with your lender that can lead to larger future business transactions

5. Develop a Purchase Strategy

Once you have determined your goals and needs, and established a rapport with your lender you are ready to work with us to develop a concentrated plan of attack.

Be prepared to present an offer quickly when the right income property comes up. The good ones move fast so don't miss your window of opportunity.

Finally, determine your timelines for buying, taking possession and tenanting your property and devise a critical path that fits in comfortably with your schedule.

To learn more please call The Toronto Condo Team and we can set up an consultation to assess your investment goals.