A clean and contemporary kitchen with a single shelf holding plants and kitchen utensils

9 Tips for First-Time Real Estate Investors in Mississauga

Sunday Aug 15th, 2021


Many people consider investing in real estate as a way to build a nest egg and have tenants pay the mortgage. There are many pros and cons to taking this leap. Here are nine things to know before you jump into real estate investing in Mississauga:

1. Find out how much you can afford 

Before you start searching for a Mississauga investment property, meet with your mortgage broker first to determine how much money you can afford to borrow responsibly.

2. Look for properties that will generate positive cash flow

The term positive cash flow means that the rent you collect from your tenants will cover your mortgage payment, property taxes, utilities, insurance and any other monthly fees. It's a smart idea to budget an additional 10% on top of your payments to save for repairs and maintenance that may pop up over time.

3. Invest in a home inspection

Before purchasing an investment property, have it inspected by a professional home inspector. This can save you a lot of headaches down the road – and money too.

4. Consult with your accountant and lawyer as to how you will take ownership of the property

There are some benefits in taking title in the name of a limited company, in order to protect yourself against personal liability and for other tax planning purposes. However, you will also have to pay about $1,000 in incorporation fees and file a separate tax return each year for your company. Your lawyer and/or accountant is a good person to speak with.

5. Keep proper records of income and expenses for your investment property

Regardless of whether your investment property is in your name or a company name, have a separate bank account apart from your personal account to track expenses. This will make tax time much less of a burden.

6. If you are buying with a partner, make sure you are protected

Ensure that you both have a proper partnership or joint venture agreement to protect you should things not work out as planned. In particular, provisions should be made if one of the partners wants to sell and the other one doesn’t or one partner is not paying their share of expenses.

7. Hire an experienced property manager

Owning an investment property comes with a lot of work. To assist you in finding suitable tenants and dealing with any ongoing maintenance, repairs or other complaints, consider hiring an experienced property manager. 

8. Be careful not to buy and sell properties quickly

It is preferable to buy properties for the long term, rent them out and use your positive cash flow to reduce the amount of your mortgage owing and build equity in your property. If you then sell years later for a profit, it will likely be classified as a capital gain and only one-half of your gain will be tax-free.

9. Take your time

Finding the right investment property in Mississauga to fit your budget and expectations takes time. It’s a decision that shouldn’t be rushed!

Your Trusted Mississauga Realtor

If you are thinking of buying an investment property, such as a home, townhouse or condo in Mississauga, contact me, Deborah Clerk, Real Estate Sales Representative and Accredited Senior Agent (ASA) at Keller Williams Real Estate Associates, Brokerage, for more information. 

Post a comment