Home Buyer’s Guide
The Ultimate Buyers Guide for Investors
Where to buy
Once you’ve decided buying an investment property is for you, next comes where to buy.
Most Ottawa new home buyers choose primarily by location, size and price, factors that are no different for an investor. After all, you want your property to be in an area that will be attractive to the rental market.
What is the ideal location?
Answering that question could depend on a few factors. If you are going to act as the landlord, rather than using a property manager, is it important for your investment property to be close to where you live?
Other questions to consider:
- Will the neighbourhood attract high-quality tenants? Think about safety and properties that are close to schools, hospitals, public transit, businesses, retail and other services. Look for master-planned communities. A master-planned community is one that has been carefully planned from its inception, determining where streets and amenities will go and what type of housing it will include. Minto communities such as Mahogany and Avalon are good examples of planned neighbourhoods.
- What future major improvement projects are planned for the neighbourhood — such as transportation like LRT, schools, commerce, amenities — that will make the location more attractive to renters?
- Is the area pre-dominantly rental properties or owner-occupied?
- Have property values increased, stayed the same or decreased in the last few years. (A real estate agent can tell you this.)
- How is the local rental market? Check online to see what competition is like for rental properties in terms of number of listings, types of listings, location, rent prices, etc.
- How is the local job market and will it give rental properties special appeal?
- Does a rental property purchase in this market make financial sense to you? Talk to an accountant to figure out projected expenses and profits beforehand, as well as income potential.
- Have you figured out expected expenses? Research what kinds of unexpected expenses might come up. For instance, the interest rate on the mortgage may be higher for a non-owner-occupied property and insurance rates are often higher for a rental property.
If you know the general area you want to buy in and how much you can afford, then the next step is to research the builders in that area, as well as their communities.
Learn about new home builders in Ottawa
The Ottawa area has more than 50 new home builders offering communities of varying sizes, locations, styles and home types. Choosing the right one for you is a key piece in a rewarding rental investment.
6 things for researching builders
- Visit their websites: This is a good place to start. Most builders will have at least basic information about themselves, their communities, floorplans, elevations, pricing and site plans.
- Assess them: Use online searches and feedback from reputable sources such as Tarion, the Better Business Bureau and, to a degree, social media to help you figure out if a builder is reputable, reliable and has good ratings. Also check their customer service, both before and after the sale, and how they handle warranty claims.
- Tour models & sales sites: Visiting builder model homes and developments is a good way to evaluate the quality of construction. You may not have an eye for the technical aspects of home building, but you can easily tell when a door trim or a paint job is sloppy. Simple details like these say something about a home’s quality. And an organized and tidy work site speaks to the attention to safety and is often a reflection of the quality of construction. Builders also now have virtual tours you can take online anytime.
- Comparisons: It can be a bit difficult, since one builder’s criteria for its homes won’t be the same as another’s, but as you’re researching, note things like:
- Standard finishes and features (that means things included in the price)
- When deposits are required and how much and whether they have a rescission period (meaning you can back out if you change your mind)
- What is their price per square foot?
- What is the energy efficiency level of their homes?
- What are the specifications for their homes (meaning things like the type of insulation used and how much)
- How experienced are they at building?
- Check past projects: Visit other developments by the builder, both recent and older. Are they maturing well? Are they appealing? Do they still look relevant and well kept? Do the design and materials stand up? Do they promote a community connection?
- Ask around: Canvas people you know to see if they’ve bought a new home recently. If they have, ask what their experience with the builder was like. Referrals can tell you a lot.
Your builder: questions to ask when buying a house
- What makes your homes better or different from other builders’?
- What are your included features, finishes and specifications? (Note: This can often change with a builder’s various models.)
- If I want to personalize the home, how much would that add to my investment?
- What do you provide in after-sales service?
- What level do you build to: just to code or beyond?
- How will you communicate with me and how often?
A key buying consideration is location. If you have not yet finalized your list of requirements, exploring communities in the area where you think you want to buy will help.
When there’s nothing to see: If you’re capitalizing on a development that has just launched and where no construction has begun, exploring the community is not feasible. In that case, turn to the site plan.
You can expect a project to have a site plan (it’s often available on the builder’s website) that indicates where streets will be, how lots are laid out, and amenities such as parks and schools. The level of detail in the site plan may be limited in some areas — for instance, future phases may not show how the lots are allocated — but you’ll be able to get a sense of how the community will develop.
There might also be aerial renderings or streetscape renderings. Looking at all of these things together will help create a picture of the community.
It’s also a good idea to drive through other similar communities the builder has done. This can help give you a sense of things like street widths and layout, how the homes integrate or are set back from the street, how the neighbourhood amenities complement the community’s design, etc.
If construction has begun: Carefully drive through the community — remember, it is a construction site — to assess how well the streetscapes are coming together, whether any amenities have been developed yet, the attention to detail, and whether or not the area resonates with you and/or your future tenants.
Site plans and renderings can help you visualize what a just-launched community will look like when it’s built.
Many buyers have trouble understanding floorplans. That’s why builders often construct model homes or have virtual tours online to help buyers visualize the space. But don’t limit yourself to floorplans that have models. The models represent just a sample of the builder’s portfolio of homes. Be sure to look through other floorplans as well. You can narrow down the choices based on what you can afford (that is, what you’re pre-approved for) and the expected lifestyle of the tenant you hope to attract.
Look at what the standard specifications, features and finishes are. Granite or quartz kitchen counters might be included, for instance, or might not. Consider what kinds of personalization are available, keeping in mind there are costs for these additional investments.
Exploring builders’ model homes
Take the time to visit model homes or take virtual tours online. This is a good way to:
- See what the spaces on paper actually look like
- Assess the quality of the construction
- See what kinds of features and finishes are available
- Evaluate whether a layout looks like it will meet the needs of your targeted tenant
Note: A furnished model helps you see how the space “works” but remember that you need to be able to look past the furniture and the finishes to see what the rooms themselves offer.
Also, remember that model homes often show many upgrades that are not part of the included features and finishes. Ask what’s included and what is an additional investment.
And take advantage of the knowledge of the Sales Representative; they’re a great resource.
The resale factor
After researching and exploring, you’re ready to narrow down the choices. You should have a good idea of the community and builder you want and a handful of floorplans that will fit your budget and the needs of your target tenant.
When it comes to making your decision, also keep in mind how long the home will meet your needs and its potential resale value. Resale value can be determined both by the home and the neighbourhood, so keep that in mind. And if you think you’ll sell, choose layouts and finishes that are more likely to have mass appeal.
- Is the builder offering any incentives?
- Will appliances be included?
- Is the community close to being completed (which will likely be more enticing to a tenant)?
- Are there inventory (or quick occupancy) homes you can consider to cut down on the time you have to wait until a tenant can move in?