Keys to Real Estate Investing

Real Estate has the potential to be a great source of generating wealth and has proven over the years to be more stable than many alternative investment classes. Consider that over the last 10 years, the average local home value in the Kitchener, Waterloo, Cambridge, Guelph region has gone up over 120%.

• This appreciation applies to the total value of your property, not just your initial down payment. IE a $100K down payment drives appreciation on a $500K property compared to other financial investments where appreciation would only apply to the initial $100K investment.
• On top of being able to use the income generated through rental payments to pay down your mortgage, you can also leverage equity in your existing real estate to buy even more.

This week we hear from our Condo Culture experts Vicki, Madeline and Scott J as they share some insight on some of the keys to real estate investing.

Scott

Location

Location is everything, is particularly true when it comes to real estate investing. Look for those things that will be desirable in the future and positively impact the appreciation of your investment property. Buy in cities where there is diversification in industry, rising employment, growing population, low crime levels, and increasing average household income. Consider locations that are close to amenities, transportation, great school districts, parks, future developments and would be attractive to potential tenants. Recent data from Statistics Canada shows Waterloo region as the fastest growing region in Canada.

Property Type

A big consideration in deciding the type of real estate property to invest in is figuring out how hands on you want to be. While single family and multi family investments allow for more independence than condos, condos are typically less manintace, since the owner is only responsible for maintaining the interior of their individual unit.

Vicki

Price

It is important to connect with a knowledgeable real estate agent who understands the market and is able to help identify the best opportunities. For resale properties, be sure to check market comparables as they give you an idea of whether a property is over, under or accurately priced. Of course, the goal would always be to purchase a property for less than it is worth. With pre construction projects, look to invest as soon as a project launches to access best pricing and incentives.

Finding the right tenant

While there is no fool proof method to guarantee a perfect tenant, there are certainly some precautions you can take to mitigate the risk of selecting a bad one. Bad tenants can cost you. You want to make sure they can pay you, so you can pay your mortgage. You want to do your due diligence, ask for references, check their employment and credit score to ensure that they will be able to pay their rent.

Condo Cultures Leasing Program and team of specialized professionals are committed to vetting and finding quality tenants for landlords. Click here to find out more about our leasing service.

Madeline

Financing

Achieving low interest and favorable terms on your investment property can make a huge difference to your monthly cash flow. This is why it is extremely important to shop around for the best interest rates. Also, because situations can change, you want to be very aware of your financing terms and whether there are any penalties.

Leverage

One of the benefits of buying a real estate property is that you can leverage the equity in the existing property to buy another property. By borrowing smartly and utilizing tools like Home Equity Lines of Credit (HELOCs) or refinancing your property you can come up with the downpayment for your next purchase, essentially multiplying your original cash investment.