# Questions To Ask Yourself Before Purchasing An Investment Property Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-05-23 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: 5 Key Questions to Ask Before Purchasing an Investment Meta Description: Boost your investment portfolio with real estate. Determine if you're ready by asking important questions about affordability, goals, expenses, and long-term plans. URL: https://financedigest.com/questions-to-ask-yourself-before-purchasing-an-investment-propertyhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1182617854-1736815691744-compressed.jpg) ## **Are You Ready to Purchase an Investment Property?** _Alt = “Man holding clipboard while talking on the phone near a ‘home for sale’ sign.”_ Purchasing real estate is a great way to boost an investor’s portfolio. Real estate provides long-term stability, significant returns, and additional income from rent. Many Canadian [investors who buy properties](https://www.financedigest.com/certainty-in-an-uncertain-world-post-brexit-investors-turn-to-commercial-property-and-fixed-returns.html "Certainty in an uncertain world – post-Brexit investors turn to commercial property and fixed returns") intending to earn revenue are multiple-property owners. Recent statistics from the Canadian Housing Statistics Program (CHSP) reveal that multiple-property owners own 31 percent of [residential properties](https://www.financedigest.com/greek-residential-property-price-recovery-picks-up-in-third-quarter.html "Greek residential property price recovery picks up in third quarter") in Ontario. Although purchasing a property is a significant step many investors take, it’s essential to be ready before proceeding, especially if it’s your first [investment property](https://www.financedigest.com/battling-uncertainty-is-the-key-to-property-investment-success.html "Battling uncertainty is the key to property investment success"). Ask yourself the following questions to determine if you’re ready for this milestone. ## **Do I Qualify for an Investment Property Mortgage?** Your qualification for an [investment property](https://www.financedigest.com/brexit-no-obstacle-as-chinese-overseas-property-investment-doubles.html "Brexit no obstacle as Chinese overseas property investment doubles") mortgage depends significantly on your affordability, credit report, and value of assets. The [lender will evaluate your ability to meet your monthly expenses to accept your application](https://www.financedigest.com/things-mortgage-lender-takes-into-account-when-processing-an-application.html "Things Mortgage Lender Takes Into Account When Processing an Application"). The first question you need to answer is [how much mortgage can I get approved for](https://moneywise.ca/mortgages/homebuying/how-much-mortgage-can-i-afford) before proceeding with your investment. You need to have an extensive financial plan that proves you’re eligible for an [investment property](https://www.financedigest.com/ethical-property-investment-can-your-money-do-more.html "Ethical property investment: Can your money do more? ") mortgage. You can provide: - A good [credit report](https://www.financedigest.com/credit-agricole-is-weighing-foray-into-german-car-sharing-media-report.html "Credit Agricole is weighing foray into German car-sharing: media report"). - Proof of income. - Proof of down payment. - The ability to show [emergency funds](https://www.financedigest.com/where-can-you-start-building-your-emergency-funds.html "Where Can You Start Building Your Emergency Funds?"). - Existing property details. ## **What Is the Purpose of this Investment?** Ask yourself your end goal related to the [property purchase](https://www.financedigest.com/using-bridging-finance-to-purchase-an-un-mortgageable-property.html "Using Bridging Finance to Purchase an Un-mortgageable Property"). You might be [interested in boosting](https://www.financedigest.com/new-lottery-funding-set-to-boost-interest-in-renovating-french-ruins.html "New lottery funding set to boost interest in renovating French ruins") your portfolio, flipping the house for revenue, or renting it out for additional income. The purpose of your [investment can help you determine if you’re ready to take the next step](https://www.financedigest.com/international-investment-soars-as-albania-steps-into-global-spotlight.html "INTERNATIONAL INVESTMENT SOARS AS ALBANIA STEPS INTO GLOBAL SPOTLIGHT"). The [investment strategy you choose will impact the type of properties](https://www.financedigest.com/2018-property-investment-market-to-be-harder-but-more-rewarding-experts-reveal.html "2018 property investment market to be “harder but more rewarding,” experts reveal") you view. Setting clear goals will allow you to narrow down your search and select the [property that best works](https://www.financedigest.com/property-development-exit-loans-what-they-are-how-they-work.html "Property Development Exit Loans: What They Are, How They Work") for your requirements. ### **What Extra Expenses Are Tied to a Property Purchase?** There are several [expenses tied to a property purchase](https://www.canada.ca/en/financial-consumer-agency/services/buying-home.html#toc4) that you need to be aware of before you think about investing. Typical expenses include home inspection, property appraisal, lawyer fees, insurance, and applicable taxes. Depending on your [purpose of investment](https://www.financedigest.com/investment-needs-design-led-apps-to-find-their-purpose.html "Investment needs design led apps to find their purpose"), your expenses could be higher. If you’re looking to fix and flip, you will need to [spend more money renovating the place](https://www.financedigest.com/is-the-next-big-cyber-threat-mis-placed-security-spending.html "Is the next big cyber threat mis-placed security spending?") to prepare it for resale. ## **Does This Investment Fit into My Long-Term Plans?** Ask yourself if you think this [investment is the right fit for your financial future](https://www.financedigest.com/investing-in-the-city-thats-investing-in-itself-welcome-to-the-liverpool-of-the-future.html "INVESTING IN THE CITY THAT’S INVESTING IN ITSELF – WELCOME TO THE LIVERPOOL OF THE FUTURE!  "). If you have sufficient [funds and a stable income](https://www.financedigest.com/foresight-launches-new-infrastructure-income-fund.html "Foresight launches new Infrastructure Income Fund"), it could be an excellent investment, allowing you to maintain this property in the long term. If your goal is to rent out the home, you should also ask yourself if you’re ready to be a landlord, as it comes with extensive [responsibilities and requires sufficient knowledge](https://www.toronto.ca/community-people/housing-shelter/rental-housing-tenant-information/rights-responsibilities-for-landlords-tenants/#:~:text=The%20landlord%20must%20keep%20the,agreeing%20to%20rent%20the%20home.) and preparation. It would help if you had enough [time to find qualified tenants and be ready](https://www.financedigest.com/the-spritz-gets-a-shake-up-something-nothing-launches-new-ready-to-drink-spritz-in-time-for-summer.html "The Spritz gets a shake up! Something & Nothing launches new ready-to-drink Spritz in time for summer") to help them with any problems they encounter when they rent your space. Purchasing an [investment property can benefit](https://www.financedigest.com/a-two-way-street-chinese-investment-in-the-uk-will-benefit-both-economies.html "A TWO WAY STREET: CHINESE INVESTMENT IN THE UK WILL BENEFIT BOTH ECONOMIES") you, depending on your end goal. If you’re looking to [diversify your portfolio](https://www.financedigest.com/how-to-successfully-diversify-your-portfolio.html "How to Successfully Diversify Your Portfolio"), a property can be a great addition. But it is necessary to ask yourself the questions mentioned above to determine if you’re ready to purchase an [investment property](https://www.financedigest.com/5-reasons-why-women-need-to-get-into-property-investing.html "5 Reasons why women need to get into property investing"). **Produced in association with Craig Lebrau** --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---