So, you've considered the reasons to buy an income property and see the value in it. But, before you sign that contract for an income property, make sure you’re getting the right home.

What is the "right home"?  It will likely have ample square footage, appeal to a wide range of tenants, and can be constructed on a site located in a crime-free neighbourhood close to quality schools, public transportation and shopping, and in a moderate to high rent district. Let's discuss why!

Target Potential Renters

A rental property might include a new build single-family house, duplex, or townhome on a lot located in a part of the city rich with potential renters. That means your rental should be located near other apartment or townhome complexes. While you might face some competition, the last thing you want is an income property in a remotely inhabited area of Edmonton or a neighbourhood frequented by transients who move when seasons change. 

Potential tenants include people with stable incomes who have an investment in the neighbourhood where they work and play: young career couples, well-established retirees, enlisted military families, or single parents. A new site located near businesses, good schools, restaurants, recreation, parks or public transportation will be attractive to most renters.

Choose a Crime-Free Location

Take a drive around a few neighbourhoods and assess whether or not a potential site is in a crime-infested area or not. If there are bars on windows and doors, a neighbourhood watch sign on every corner, or a satellite police station in the same block, keep driving — it’s obvious that area is riddled with crime. You dare not subject potential renters to vandalism, theft, or worse.

Look for Moderate to High Income Potential

Income property located in an area known to demand higher rents may ensure that your rental unit will demand a comparable price and produce a good monthly income. Study the comps by perusing newspapers or checking property values through the city website. The tax assessors’ office will provide maps, property tax rates, and market values for existing properties. Take your time and do your homework to find the right income-producing site at the right price.

Consider the Curb Appeal 

Once you find the right neighbourhood, choose a house plan with attractive architectural features, overall appearance, and curb appeal. An attractive residence attracts renters. If you plan on living on site, you will want a well-constructed newly built single-family house, two-family flat, duplex, or townhome that you can be proud of. 

If you prefer to manage an income property from an offsite location or hire a property management company, you still want to choose an income property or new build with the right curb appeal in an attractive neighbourhood. Tree-lined streets with clean, paved sidewalks and professionally landscaped lawns will demand more income than run-down unkempt dwellings — even if the rent is cheap. 

Focus on the Floor Plan

A good floor plan for a secondary suite includes at least one bedroom and private bath, a kitchen or kitchenette, and living area. Tenants want and need a versatile space they can call their own with room to sleep, eat, and entertain. A house with a second storey, a finished basement, or even a separate wing may offer the privacy and space that appeals to renters. 

A two-storey house enables landlords the opportunity to occupy one floor while renting out the other. The advantage is homeowners can save on their mortgage while simultaneously realizing a lucrative second income. If your builder constructs a home with separate utilities, HVAC, and electrical, the tenant is responsible for paying their own utility bill. That’s a plus for landlords concerned about how to control utility expenditures.

New Build or Rehab? You Decide

An advantage to having a secondary suite as part of a new build is twofold: (1) new construction can be financed as part of the entire property and (2) your architect can make adjustments or additions to blueprints for a new build easier than renovating an existing space. Plumbing lines, electrical wiring, and sewage can all be included and submitted to Edmonton’s planning and zoning commission prior to breaking ground. 

A new build secondary suite may also prove to be less costly than adding on to an existing structure. Homeowners often discover faulty or outdated wiring and electrical services have to be replaced in order to accommodate a rental unit, an existing sewage line may not accommodate additional occupants, or an existing foundation may have to be shored up to accommodate extra square footage.

Weigh House Plan Options

A basement development is a great option for a secondary suite. Consider purchasing plans that have walk-out basements, providing a separate entrance for a potential tenant. Since most basements span the entire square footage of the house, such a development can be partitioned and finished with one or two bedrooms, living area, kitchenette, and bath. 

Be sure to have your contractor insulate and moisture proof a basement unit to ensure weather-resistant comfort – especially during frigid Edmonton winters. Larger basement suites accommodating families of two to four can also command a higher rental price.

A duplex or townhouse unit gives tenants the feel of a private home, but landlords have the liberty to monitor and manage the property from next door with a shared wall. Renters are less likely to cause excessive noise or damage with a landlord on the premises. Duplexes are also constructed with separate utilities for better control over expenditures.

The best way to choose a new build income property is to peruse architectural plans. Drive through prospective neighbourhoods to locate a building site, and talk to your contractor about construction costs associated with a secondary suite. Do your homework and making the right decision will be easy. 

Once you've found the right home, you're well on your way to becoming a great landlord. Our posts on the steps to becoming a landlord and landlord rights and responsbilities can help guide you through that next stage.