Have you ever wondered if only rich people have fabulous credit scores?
Wonder no longer. The truth is you don’t have to be rich to have an awesome credit score in Canada. You just have to learn to live within your means.
The ironic thing is that people who don’t have good credit are the ones who wish they had good credit scores while those who have awesome credit scores usually don’t care because they don’t want to borrow any money. Part of the reason for this is that people with the very best credit have usually learned to work with what they have. If they don’t have the money they need to buy something they want, then they don’t use credit to buy it. They save, and then they buy—but only when they have the money. If they do use credit, they will only use a small amount of credit that they know they can quickly repay.
Steps you can take to create an amazing credit score
If you have a poor credit score, you can eventually turn your bad score into a great one by following the tips listed below. We know it is easier said then done, but here goes . . .
- Pay all of your debts on time each month and never be late.
- Have two or three credit cards report on your credit bureau. A line of credit will also help but is not necessary.
- Have reasonable credit limits available to you on your credit cards and line of credit, but don’t use them (or hardly use them).
- Don’t apply for credit too often.
- Do all of the above over many years and your credit score will be amazing (the only catch is if you have late payments or other negative information reporting on your credit bureau right now, this bad information will need to fall off your credit bureau before your credit rating can soar. It can take 6 to 7 years from the date bad credit occurred for the negative information to fall off your credit bureau).
- Learn to live within your means without using credit. If someone took away all of your credit cards and your line of credit tomorrow, how would that effect you? Would your life continue on just fine or would that really mess you up? You will never have an awesome credit score as long as you depend on credit. You have to break your dependency and learn to live on a budget. Once you learn to live on cash, and start making progress paying down your debts, your credit score will continually improve.
- Make living on a cash budget a life style choice. As the years pass and you pay on time and don’t charge much on your credit cards, you will feel better knowing that your finances are under control.
Tips for buying your first rental property
March 21 2017 Posted by
The neighborhood where you choose to purchase your first investment home will have a huge impact on the success of your endeavor. Here are a few neighborhood features to keep in mind:
- Look closely at crime rates. Buying in a high-crime area may help you snag a bargain but you need to ask yourself if it's worth it. Areas with a lot of crime may not attract the best quality tenants, and you may find yourself dealing with the hassle and expense of frequent vandalism and break-ins. You will also be limited in how much rent you can reasonably expect to charge.
- Buy in the best neighborhood you can afford. If you are starting off with a small budget, purchasing a rental home in an 'up and coming' neighborhood that shows signs of gentrifying and appreciating in value can be a great opportunity. Just bear in mind that you will need to be patient as it may take years for rent prices in the neighborhood to go up significantly.
- Pay attention to schools in the area. If there are great schools close by, you will attract families who want to rent long-term. On the other hand, if you buy a home near a university you will always have potential renters but will have to deal with frequent tenant turnover and possible damage to your property.
Be Wary of High Vacancy Rates
The key to a successful investment property is to have it rented out continuously. Even if you only charge enough rent to cover your mortgage, property taxes, and related expenses, this is better than owning an investment property that sits empty for long stretches of time. If a high percentage of homes in the area seem to remain vacant for months at a time, chances are yours will as well.
Be Conservative When Estimating Expenses and Profits
It's important to think long-term when buying an investment property. Unless you are buying a home with cash, don't expect it to be profitable until you've paid down your loan quite a bit and built equity. At first, just aim to cover your expenses and always estimate these on the high end just to be safe.
Consider Hiring a Property Manager
Property managers will handle many of the time-consuming tasks involved with being a landlord, all for a small percentage of the monthly rent. They will find and screen tenants for you, run background checks, collect rent, call repair workers and house cleaners, and even perform basic maintenance. Hiring a skilled property manager often saves money in the long run, because it helps avoid costly vacancies and evictions.
Look for a Move-in Ready Home
Unless you have a construction background, make your first foray into real estate investment as easy on yourself as possible by buying a move-in ready home. Look for a home that can easily pass an inspection and is not in need of major repairs or renovations. On the other hand, cosmetic details like paint colors, old carpeting with nice wood floors underneath, and dated fixtures can easily be tackled by a novice without spending a lot of money.
By following these tips, you can move into investment property ownership without regret or worry.