What type of investment do you want?
Quite often when people are thinking of investing immediately they think of investing in a big city.... big city big profits right? Not necessarily .... there is a lot more to investing than what people think. There are many factors which play in to the real estate market that need to be accounted for when looking for an investment property.
Typically people think to invest their money in stocks, mutual funds, GIC’s etc.... but why not Real Estate? The thing about Real Estate is that it is never going to go anywhere.... yes throughout the years the price may fluctuate as with anything... however real estate poses a better ROI if you are investing in the right areas and have a plan which you can execute.
At The Fresh Approach Real Estate Team we are very familiar with investment properties and areas that you may not think to invest in.
The key to investing is to establish the following:
How long do you want to hold the property for?
- What is your time frame?
- If it is a new home can you manage the deposit increments?
- If it is a new home is there an ‘assignment provision’ included in your contract?
What is the purpose of your investment?
- Are you looking to flip a house?
- Are you looking for consistent profit throughout a specific time frame?
- Is it a long term investment? Perhaps a second home? What are the costs associated with maintaining this home?
What is the over head?
- Theoretically you should deduct 5% of your anticipated profit from your total for additional expenses
- If dealing with a condo does your investment property include TMI
- If it is a rental how quickly can you rent it out?
What TYPE of investment is this?
- Student rentals, family rental, single rental?
- And assessing the associated risks with each
More often than not student rentals get the reputation for being outdated and not necessarily well kept due to the student lifestyle.... having previously been a student myself I would tend to agree with this general statement. HOWEVER if you are purchasing in the correct area and are guided correctly with proper lease terms and conditions etc.... this will not be a problem for you. When looking for a student rental the important thing is to see the big picture and to assess the following
- What are the rental rates in this area?
- With my mortgage and taxes what rate of rent would need to be charged to clear expenses?
- As a landlord what are the legalities and responsibilities I have to my tenants?
- How as a landlord can I stay protected against damages?
- What is the best area to invest in for student properties?
One area that we recommend to invest in for student rentals is Brantford.... Brantford has both a University (Wilfred Laurier) and a College (Mohawk) and a rapidly growing student population. Brantford’s housing market within close proximity to the school’s also tends to be less expensive versus Toronto for example. And to add to that Brantford’s monthly rental rates for students averages between $400.00 - $600.00 per month, per student. When working out the financials for this area and areas that are similar over all they tend to create a better ROI for this type of rental versus Toronto.
Thinking of investing in a new condo build?
New condo builds have become increasingly popular for investors as well as first time home buyers as they offer the flexibility of not having a mortgage until your occupancy date. Toronto as the saying goes ‘is moving up’ and has continued to build high rise condo developments to maximize space and potential living area. Stay tuned for our blog tomorrow about an exclusive VIP condo event in King West/ Liberty Village!! So if you were to ask where to invest in a new condo development well of course the answer would be Toronto or specific sections of the GTA ie: Mimico (Etobicoke by the Lake- Parklawn and Lakeshore)
With developments of the new LRT system along Eglinton in Toronto, condo value will continue to increase.
Things that you should look for when investing in a new condo development?
- Is there an assignment provision attached to my lease?
- What buildings has this builder previously done, what was the ROI on these developments?
- What are the comparables in the area?
- What is the rental rate per sq ft
- How long do I want to hold this property for? What is the best time to sell to maximize my profit
- Should my condo purchase include a storage locker or parking space?
The most important thing is to do your research, and to work with someone that is well informed of various market conditions and the best practical way to invest your money for of course the most profit!
Many people when dealing with investment properties because they may have already purchased a home elect to not use a realtor......If you had a problem with your car would you fix it yourself? Probably not.... there is a reason why Real Estate Professionals are designated as that because they are informed and up to date on current market trends and information to help you make the best purchase. Make sure you get to know your realtor when dealing with an investment property and to trust them to help you make the best decision.
This link provides an interesting perspective from the Canadian Real Estate Wealth Magazine on why you should always use a realtor http://www.canadianrealestatemagazine.ca/videos/item/1403-investor-insight-time-to-lose-the-realtor
Whether your investment is ranging from a student rental, new condo development or a second home at The Fresh Approach Real Estate Team with Keller Williams Realty Solutions we are well informed of different types of rental properties and areas in which to maximize your profit. As a team we work together to find you the best property for the best value.
The Fresh Approach Real Estate Team,
Allana Thompson, Christy D’Oliveira, Kyrsten Feere
Allana email: firstname.lastname@example.org
Christy email: email@example.com
Kyrsten email: firstname.lastname@example.org