Know your numbers

Why is this so important?  This is one of the main reasons I started doing this.  I would get so frustrated with real estate agents sending me cash flow projections that were not even close to the real thing.  
Look at the costs that need to be added….   And yes, it will be very difficult to cash flow once you add it all up.  These are the numbers they do not want you to see!  Here’s the thing, if you are willing to put $300/month to your RRSP or TFSA for your child's education... then why not to the purchase of a rental?  Property will outperform any of these investments with a tax break if done correctly.

Let’s look at the numbers.
-Mortgage payment for 80% of the equity.  Make sure the correct rate is being used.  Rental rates on mortgages are usually .25 higher than standard rates and much higher than the insured rates (sadly, its usually the insured rate that gets used).
-The cost of the 20% that was borrowed for the down payment.  We want to maximize the deduction.
-Property taxes
-Cost of a property manager
- Future repairs.  How old is the roof or furnace or minor repairs, are you converting the property?
-Accurate rental numbers for the area.  Some realtors will inflate the rental numbers or potential rent od xxx because the current rents are too low and locked into leases
- Utilities.  Are you paying for them or the tenant?
-Snow removal or grass cutting
-Condo or maintenance fee

Rule of thumb...  if the numbers look too good to be true... it’s because they usually are.

The biggest mistake you can make
It’s easy to make a mistake, and over the years I have seen some very costly ones.