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Buying a tenanted property can be a good investment for many reasons. You might want to live in one unit and rent out another unit, offsetting your expenses with tenant income. You might want to own the property and have both (or more) units pay your mortgage and most of your expenses. You may want to have a property that earns excellent income in the future.
Either way, you must do your due diligence before buying.
Make sure you have your Realtor draft and include the following clauses and Conditions in the Offer:
- the Offer is Conditional on the buyer's solicitor's approval
- the Offer is Conditional on the seller providing current leases for all tenants living in the home
- the seller warrants and represents that there are no ongoing issues between tenants and the landlord
- the seller agrees to submit proof of rent payment for all tenants from the beginning of each tenancy
- the seller warrants and represents the the tenants are paying for 'X' utilities and any other itemized expenses
Other considerations are the following:
- is there a property manager in place, and if so how much is the cost and what are the services and inclusions?
- include a Condition for a Home Inspection
- include a Condition for Financing and Home Insurance
- set up an appointment to meet the tenants
- ask the City if the property conforms with appropriate zoning rental purposes (seems obvious but best to confirm with the Planning department)
- speak to the neighbours and see if they have any complaints
If the right property comes along and requires minimal capital investment, and have reliable tenant income, then off you go towards including an additional income stream.
