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Seven costly mistakes of property investment

Would-be buyers are often scared by hellish income property stories. But if you want to stay out of property purgatory, writes investment expert Paul Kondakos, avoid the following 7 Deadly Sins of income investing:

1. Poor Property Selection – This one can weigh on anyone’s soul as purchasing the wrong investment property can have long lasting repercussions that can range from high vacancy rates to exorbitant maintenance/repair costs. You need to ensure that you educate yourself and do your homework before you jump into any investment. Start by learning the criteria that make for a good income property investment.

2. Lazy Expense Tracking – Income property investing is a business, and as such, you need to be doing one of two things. Increasing revenue or decreasing expenses. Failure to track expenses is a costly mistake as patterns may reveal opportunities for cost savings. One such example is utilities which are one of the biggest expenses in operating an investment property. Often times water leaks can go undetected and cost BIG money. Simply tracking your bills will alert you to any activity that is out of the norm and allow you to act immediately.

3. Inadequate Tenant Screening – If you want to truly experience income property Hell don’t do any tenant screening at all. This is the one of the biggest sins you can commit as a property owner as you leave yourself open to unpaid rent, property damage, disruption of other tenants, additional unwelcomed tenants and a whole slew of other bad things which can cost thousands of dollars. To avoid this certain Hell, ensure you (A) Check Credit (B} Check Employment References and Pay Stub (C) Check Previous Landlord References (D) Check Personal References (E) Check Photo ID and (F) Ensure you Get First and Last Month’s Rent Up-Front.

4. Negligent Superintendent Supervision – Failure to supervise can be a costly mistake as the downside can range from missed efficiencies or savings opportunities to outright fraud or theft. No matter how great your superintendent or property manager, you still need to actively manage them as no one has your best interests at heart like you do. To ensure everyone is on the same page have regular meetings with your superintendent or property manager to review repairs, expenses, tenants and protocol.

5. Sloppy Accounting – Not keeping track of your income and expenses will not only put you on a fast track towards major headaches at tax time, it will leave you in the dark about potential inefficiencies and costs savings opportunities. Using an accounting program such as Quick books or a simple Excel spreadsheet will help keep you out of CRA’s Inferno.

6. Deferred Property Maintenance/Repairs – There is a special place reserved in Hell for the Slum lord. This one is a double whammy for those that are eager to experience income property Hell. While no one likes to shell out money for maintenance and repairs, failure to do so will inevitably lead to 2 other certainties (A) good tenants will leave and (B} repair and maintenance expenses will begin to grow exponentially the longer they are ignored. Keep your inner Slum lord at bay by putting aside funds to carry out regular maintenance and repairs.

7. Complacency on Rents – As mentioned in Sin #2 (Lazy Expense Tracking), income property investing is a business. Failure to keep up with going market rents will keep you from achieving maximum potential income (and keep you from maximizing the market value of your income property). Ensure that rent increase notifications are being handed out every anniversary as per the prescribed guidelines and that any newly vacant units are being priced according to going market rents.

Avoid these 7 Deadly Sins of income property investing and you will find that income property investing can be a heavenly experience. Source: Canadian Real Estate Wealth

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Edition Richmond Residences

 

Edition Richmond is a collection of 20 tailored residences in Toronto that elevate real estate to art.

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The Edition Richmond Residences are three storey; two and three bedroom homes, each living space is its own masterpiece, designed by Audax Architecture, a boutique firm and recipient of the 2011 Toronto Urban Design Award. Renowned interior designers, Cecconi Simone have cultivated homes that are aesthetically stunning and highly functional and which reference the clean geometrics of 20th century cubism. Cecconi Simone have strived to make these residences so exclusive in their design, that they have ventured through the painstaking details such as creating custom blend stains for the hardwood flooring that will be featured as a standard in each home and will be exclusive only to Edition Richmond Residences. Custom designed kitchens expand into the dining area and living room for a contiguous main floor that is perfect for entertaining. Homes feature 10 ft. ceilings for a voluminous living space that feels airy and comfortable to come home to. Sky yards offer magnificent views of the skyline, providing you your own urban oasis (most homes). And what makes this all so appealing is that these luxury residences are nestled in a quiet enclave just south of Queen West where the amenities of urban living are coupled with a peaceful streetscape.

Edition Richmond Residences embodies the spirit and liveliness of Queen West and is at the epicenter of some of Toronto’s greatest neighbourhoods – Trinty Bellwoods, Ossington Strip, Dundas West and Liberty Village. These areas offer the best in shopping, dining, culture, nightlife and recreation.

The opportunity to live the clean lines and crisp beauty of an Edition Richmond by Cecconi Simone can be your everyday reality – world-class design that may otherwise be out of reach.

By indicating your interest in Edition Richmond Residences at this early stage, you’ll be among the first to be invited to view Price List and Floor Plans and take advantage of our insider’s member club.

 

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