Retirement could be a good time to become an investment property owner.  It can provide an opportunity to improve a run-down property for those who enjoy this type of thing. Others may consider a rental property in a warmer climate.  Retirees are likely to have more time on their hands to prepare and monitor a rental property and often bring helpful business experience to the role.

Depending on your views regarding the status of Canadian residential real estate, you may feel that there are some buying opportunities in the not-too-distant future.  Some locations are already showing a weakness in their markets – see Ben Rabidoux at http://theeconomicanalyst.com/content/canadian-housing-and-economic-trends-good-bad-and-ugly .  Other experts have provided analysis on risks in the Canadian housing bubble including Robert Schiller and most recently Adam Peterson in: http://www.thestar.com/opinion/commentary/2013/07/14/canadian_housing_bubble_looks_ripe_for_popping.html.  Canadians have certainly entered into the U.S. market and purchased properties at some incredible discounts.

A candid perspective about dipping into the rental income marketplace has been provided by www.yesiamcheap.com[1] .   A lot can be learned from a person who is cutting their teeth on a financial strategy and candidly shares the experience.  Some ideas from their ups and downs as a mini-real-estate-mogul are:

  1. Property purchasing is about location-location-location and renter selection is about background checking-checking-checking;
  2. Prepare for unexpected expenses.  Their property taxes unexpectedly doubled on one of the two properties purchased;
  3. One prudent approach in picking a renter is to begin with month-to-month contracts for the first 6 months, decide if the renter is suitable, then sign a longer term agreement if local rules allow for ease of removing tenants without leases;
  4. If you are an out-of-province or out-of-country property owner factor in ‘distance’ costs.  Insurance will be higher for a non-resident owner, plan for fees to have a professional check on the property, higher legal bills including additional estate preparations even possibly including additional wills or powers of attorney for this geographic jurisdiction.

The yesiamcheap.com mini-mogul’s current perspectives are summed up in:

“There are a lot of risks and headaches involved with owning rentals.  My initial strategy was to buy one home every 2 years, however, I am seriously thinking about revising that strategy for something else.”

One final thought – if you are contemplating jumping into the mini-real-estate-mogul role, consider the costs to exit.  Sure, if things don’t work out as planned, you can sell the property.  Factor these exit costs into your business plan before your enthusiasm motivates you to sign an offer to purchase.