Smart investors have taken advantage of Canada’s strong economic fundamentals by taking a step back and analyzingreal estate property investment key economic indicators, which have set them up for big profits down the line. But what measures should individuals that are new to real estate investment take?
When investing in real estate, your goal is to put money down today and make it grow over a period of time so you have more money in the future. You have to make enough of a profit, or “return”, to cover the risk you take, taxes you pay, as well as the overhead costs of owning the real estate investment, such as insurance and utilities.
In other words, once you understand the basic fundamentals of real estate investing, really get the most out of your real estate investment?
Focus on the fundamentals
Sticking to the fundamentals of real estate investment will serve buyers well while the majority of the buying community struggles to stay levelheaded. Location is always key, and one must always consider proximity to work, infrastructure, hospitals, educational establishments, cafes and restaurants in the area; all being the best drawing cards in terms of popularity among both tenants and owners.
The property must appeal to the whole spectrum. Remember, GDP growth leads to job growth, which attracts migration, leading to population growth and increased rental demand. This demand drives rental prices up, pushes people to buy properties, and eventually leads to property price increases.
Tip: Properties in blue chip locations are sold at a premium when the market is booming, but when markets slow, its times like these that buyers can enjoy prime real estate properties for a more achievable market value.
Exert your buyer power
The current economic climate is an ideal time for buyers to exercise their power. This can be in the form of negotiations to select properties below market value, to stay well within your budget, and to see positive cash flows and capital growth in the long run.
Tip: identify the markets that are set for growth, and jump in while many other buyers are running for cover.
Look for areas that can weather any downturn
One must always consider fundamentals such as population growth, infrastructure spending, and job growth, which are the ingredients that create a big demand for property. Notwithstanding, many of these areas also offer affordable prices, which is a win win on all fronts.
Tip: before investing in a selected area, consider some key questions, such as:
- What kind of economic development programs are in place to encourage economic growth?
- What are the major infrastructural projects?
- Is there a significant GDP growth in the area?
- Are unemployment rates falling?
Find a Property Manager
The benefits to having a property manager look after your real estate investment are many, including lower vacancy rates, higher quality of tenants, and the ability to own an investment property far from home or overseas.
Today many small scale investors believe that the classic ‘do it yourself’ method involves very little work and a cost they can avoid by managing the property themselves. However, the problem with this is that most landlords don’t understand the business and what it means to be a landlord, with no formal training or experience.
The list is endless, between complying with regulations to juggling things like tenant needs or eviction; property investors can easily miss some important aspects that would otherwise be controlled by the property managers.
As property managers have extensive experience with all these aspects and requirements, they have the ability to smoothly facilitate repairs, collect rent, write up and issue eviction notices and work with the tenants, all of which will add up to savings the owner money with quicker response and turnaround times.