Thursday, December 13, 2007

Thoughts On Investing in Real Estate - Part 2

Here is Part 2 of Zarah Walpole's commentary on Investing in Real Estate. In Part 1, we learned about financing and tax issues. Now let's take a look at two other issues to be considered:

If you’re going to be covering some of your costs by renting the property to a tenant, you’ve become a landlord and will need to be conscious of landlord and tenant law. The law varies considerably whether you are renting a residential or commercial property. In either case, you need to know the rules that will apply to your situation. An absolute minimum requirement in either circumstance is to enter into a well drafted lease agreement. From a practical point of view, I cannot emphasize enough the importance of checking potential tenants’ references. Knowing how to legally evict a tenant is one thing, never having to do so is an even better thing.

If you plan on changing the current use of the property (i.e. adding an apartment, putting in a business), it is vital to ensure that your proposed use is permitted. For example, municipalities have zoning by-laws that only permit commercial uses in certain areas. Here in Barrie, not only are basement apartments only permitted in certain zones but they also have to be registered with the City. Knowing the zoning of your property ahead of time and making sure that it fits with your plans is good business.

Stay tuned for the final part of our series on Investing in Real Estate.

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