The Basics of Investing in Real Estate

 

The Real Estate Market in Canada is on the rise; going up 66% since 2008! If you’re thinking about investing some of your hard earned money and building your capital, you are definitely going to want to consider adding Real Estate to your portfolio. Unfortunately investing in Real Estate can prove to be complicated. It takes hard work, strategic thinking, and commitment. We can’t sum up all of Real Estate investing in one blog post however we can touch on the basics in a few paragraphs!

 

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A Hand Representing Investing and Personal Financ

 

“Before you decide to invest in Real Estate, or commit to any large investment for that matter, you must be prepared.”

 

 

 

 

First and foremost, before you decide to invest in Real Estate, or commit to any large investment for that matter, you must be prepared. Not only do you need to be qualified to apply for a mortgage, but you need to ensure that you are in a financial position to invest your dollars into any kind of growth investment. You then need to find a good Mortgage Broker (see our video on this topic,) then find out your credit score and see how much you can be approved for by the bank. All this needs to be done with a target and goal in mind of how much you are willing to put into your Real Estate investment, and also how much you would like to realistically profit from it. This will serve as your base for the entire investment.

Once you are in a position to invest, you must find a home or property with growth potential. This step is fairly obvious, however it happens too often that someone will buy the wrong property, or even pay too much for it, and actually lose money off of their investment. Look at the expenses of the property. Does it currently cashflow? If n0t; does it have the ability to cashflow? Do the profits from the cashflow outweigh the expenses of the investment? These are questions you need to think about when finding the right investment property for you.

There are four common types of investment properties the average investor should be looking into.

i) Student Housing

ii) Traditional Family Homes

iii) Flip Properties

iv) Multi-units

Each type of property comes with it’s own set of pros and cons; offering different returns, and demanding different types of work. For example, Student Houses must have enough room for a large group, must be in a good location in proximity to the school, and you will likely have to put up with a frequent rotation of tenants and quite possibly the odd repair or two! While Family Homes on the other hand, have completely different values that must be catered to, and need to be treated accordingly.

Make sure you hire a realtor who has plenty of both personal and professional experience in investment properties to ensure that you invest in a property with the most amount of profits and the least amount of headache as possible to ensure that your next investment opportunity is a profitable one.

 

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