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June 16, 2022 Published by Amrit Hunjan Categories: Buying

Read This Before Buying a Rental Property in Edmonton

Rental property investment is a great way to generate extra income. But it’s not as easy as wanting to have a source of passive income and then just going for it.

If you’re thinking of buying rental property in Edmonton, there are a lot of things you should consider first. Having enough money to buy a house isn’t enough. You should also think about whether you can afford to maintain the property even if you have no tenants paying rent.

And speaking of property management, it’s a little more complicated than it sounds. It’s not just about collecting rent. As a landlord, you also have a responsibility to make sure that your property is always running smoothly for your tenants.

Header image source: Pexels

The Cost of Rental Property Management in Edmonton

Managing the rental property yourself has its pros and cons. For one, you don’t have to pay a professional fee since you are your own property manager. The downside, though, is that when there are emergency repairs needed, you’ll have to take care of them yourself or source out people who can handle them.

If you hire a property manager to take care of your rental property, they usually charge you about 6–12% of the monthly rent for that property. Other companies have a flat rate of around $100–$200.

The fee you pay your property manager depends on several factors such as the property size, type, and condition. The neighbourhood rating and market competition also add to the fees sometimes.

The price changes depending on whether you want to have a property manager who takes care of everything or just one who covers the basics.

The good thing about finding a company that charges a base rate is that it’s usually lower than fixed rates. You’ll also only have to pay for necessary repairs and maintenance fees. Depending on the circumstances, this may or may not be a good thing for you.

With all-in rates, though, the money you put out monthly for property management already covers everything. It’s easier and usually less of a hassle. That also means your property manager can take care of matters faster.

Administrative Fees

Some property management companies charge an administrative fee to get you started. This covers setting up all the necessary documents and accounts you need for the management of your property.

Vacant and Leasing Fees

There could also be charges for maintaining the property when it’s vacant as this could require more care. Similarly, once the property manager finds a tenant for you, they could charge a leasing fee. They tap into their network and do extra work to find someone to fill the vacancy in your property.

Late Payment, Eviction, and Collection Fees

Going after late rent payments may also require extensive work. Your property manager may have to go out of their way just to make sure that a tenant pays the monthly rent.

Most landlords charge a late payment fee for tenants who can’t pay rent on time. A part of this fee (or sometimes all of it) usually goes to the property manager.

You’ll also have to pay the fees for collection of rent and, possibly, eviction fees as well. This involves getting in touch with a law firm that could assist with the matter.

Repair, Maintenance, and Routine Inspection Fees

To make sure your property is well-maintained, the property manager has to conduct routine inspections from time to time. This helps in seeing potential problems your property may have. This also allows them to fix the issue before it becomes an even bigger and more costly undertaking.

How to Find a Rental Property to Purchase

Now that you know how much you might spend on rental property management, it’s time to find out how you can find a property to purchase.

First off, before you even bring any professionals in, try to search for properties on your own. This helps you narrow down your search and find out which characteristics or features you want in a house. You also won’t have to feel any pressure as you look around for properties.

Look into the neighbourhood where the house is located in. It might be a good idea if there are nearby establishments such as malls, schools, offices, hospitals, pharmacies, and restaurants. These usually attract more tenants and make it easier for you to fill in the vacancies in your rental property.

If there are a lot of vacancies in the area, it might be because the neighbourhood is coming to a decline. It usually turns off some buyers and makes them think that it’s not worth it to rent or move into the area. This is one of the things you should avoid as much as possible.

But it can also be because of a seasonal cycle for the neighbourhood. For example, if you buy a rental property near a university, there might be a lot of vacancies in the area in summer. It’s not always because of a decline. Watch out for this as you look into rental properties.

Another thing to look for in a rental property is its potential for future development. Construction in the area usually signifies good growth. Also, if there are offices moving into the area, there will be more demand for housing in the area. And that’s a really good sign for you as a landlord.

Lastly, you’ll have to look at the average rents in the area. Try to compute whether you can generate much profit with the current rates. Don’t forget to factor in things such as property taxes and how often natural disasters could strike the area. Taking care of these matters takes away from your profit.

Buying a Property in Edmonton

edmonton rental property

Image source: Pexels

Rental property management may be a huge undertaking, especially if you have to juggle a full-time job and other important matters with it. It’s usually easier to hire a property management company to take some things off your hands.

Doing so helps you enjoy the benefits of your rental property without the stress that comes with it. You may have to spend some of your profit on the services of a property manager, but it’s a small price to pay—and one that’s so much worth it.

To recap, here are the things you should know about property management in Edmonton:

  • Property management fees usually take up about 6–12% of your monthly rent. You may find other companies that charge only a low base rate and add only the necessary fees that maintaining your property incurs.
  • Other fees may build on your base rate. Or they might have to factor into your fixed rate. Nonetheless, these fees could easily drive up your property management fees.
  • The amount you pay also depends on whether you avail yourself of an all-in property management deal or a deal that covers only the basic expenses.

If you’re planning to buy a rental property, take a look at some of the properties for sale in Edmonton. You’ll find some really good deals out here since the market is strong and hot this year.

Contact me if you need any assistance in finding the right rental property for you. I’ll walk you through the process of buying a home in Edmonton and offer you expert advice on things you’re wary of.

I can also help in choosing a mortgage broker for when you’re ready to purchase your rental property. Let’s get that extra passive income for you ASAP!