Are you looking for an investment property? One that you can renovate, and/or rent out for income?
Real Estate can be a great investment vehicle, but you do have to do your homework.
Everyone tells you to watch out for tenants, and check them out carefully, but really you have to do your homework right from the beginning of your real estate journey!
We saw a property for sale in a small town, that is quite desirable, and from my research, I knew that property values would be on their way up in this area, and it would be worth the extra cost to take this property and invest in some renovations to modernize it, and increase the equity.
We also noticed, in the listing, that there were two homes on one property, and the listing read "live in one and rent out the other" "cover your mortgage payments and live free". The houses looked a bit worn down, so we knew there would be upgrades needed, but it was also priced accordingly.
The day, our agent met us there, the tenants were still living there, and not very happy to see that their homes were for sale, and they risked being evicted. But we were happy with the idea of tenants, and they seemed to relax while we looked through. We were looking for an investment property, and we found out through the listing agent, that these tenants were good at paying their rent etc. So, we thought this was a great setup.
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We looked at the listing closer, and it had all the measurements of the rooms, and we had a good look through both buildings. The one building was a typical 40's style cottage that had a few additions, so it needed some work, but the other house bothered me, as it looked like the shape of a small barn style cottage, and once inside, I almost got my head sliced with a ceiling fan. I realized that you would have to be 5' 6" or under to live in this place. It was clean, but very poorly built, and I know it was not to code.. Not impressed with this one. But a family had been happily living in there for a few years now.
But what really shocked me, was the note in the listing that said "bylaw" owner of property must live in main house, in order to rent the other".
So, after looking around, and wondering where the septic system was, I decided to do my next stage of research and head to the township offices, as septic beds and permits are registered there. I was also concerned that two houses must be using this one septic bed.
I was not expecting the reaction I got. I showed her the listing so that she could get the address and let me know where the septic bed was.. That was really my only question, until she saw that it had 2 houses on it. I thought her eyes were going to pop out! She pulled out the file, to find that back in 1978 the owner had been given permission to build a storage barn, and that was it!
I told her about that "bylaw rule", and she said "someone made that up"! There is absolutely no way that two houses can be here. She started yelling commands at a poor girl at her desk, about getting the bylaw officer, and the health officer out to the property.
So, I guess I just stirred up trouble. But the point of this article is, that you still need to do your own homework and research. I instantly told my agent, who told the listing agent. She had taken the bylaw ruling from the owner . assuming it was true. So, get the information right from the township.
Most towns have bylaws and all the information you will need to find out if a investment property is legal. If you rent out a property that is not legal, and it burns down, your insurance will NOT payout. For an investment to give you the returns you want, you need to know that all the laws, bylaws and legalities have been addressed. Do NOT just trust the real estate agent or the owner of the property, find out for yourself and save yourself a lot of headaches.
What I thought was funny, was that there were many interested people in this property, and yet we were the only ones who checked out anything at the township office.