Is Real Estate a Good Investment?

Real estate is a good investment, but there are many things you should take into consideration. Investing in real estate is an important decision which requires a lot of time, effort, and resources.

What is your Real Estate Investment Goal?

By understanding your goals, budget, and the current real estate market, you can decide if now is the time to start investing in real estate. It’s always best to give yourself the time to determine whether it is an investment that you want to undertake. Like anything in life, there are pro’s and con’s to investing in real estate, but it is up to you to decide whether this is a venture that you want to take on. This article will help you make sense of the complex world of real estate and determine if it is something that you are interested in pursuing.

In cities across Canada, more and more people are interested in investing in real estate, because they see and understand the potential benefits of their investment. TV shows like Property Brothers and Flip or Flop have inspired many to invest in residential and commercial properties, restore them, and either rent or sell the property for turnover. But what are the potential benefits and consequences of investing in real estate? Is real estate a good investment, or is it an undertaking best left to professionals?

Real Estate Investing In Today’s Market

Edmonton’s real estate market has moved slowly so far this year due to the number of properties for sale and other factors like the federal mortgage stress test (which places limitations on the amount of money that potential homeowners can borrow to purchase a home). Though it may take time for Edmonton’s real estate market to recover, this does not mean that real estate is a bad investment. In fact, it is a great time to buy an investment property as you do have a ton of selection, prices have come down several percents over the last couple years, and mortgage rates are low.

Types Of Real Estate Investments

There are a variety of options where it relates to property ownership and deciding how to garner a profit from your investment.
Some investors choose to buy and flip a property, in which a property is purchased, renovated and sold to gain a profit.

Others choose to buy a property to be used as a rental. This is a common investment choice for people because they have the opportunity to have someone else down the mortgage, have equity grow over time, and pull in a bit of cash flow or monthly revenue.

There is even the option to own commercial properties like apartment buildings, commercial bays for rentals, and land. However, the type of financing and closing costs involved for a commercial purchase is vastly different than residential.

Deciding which options will work best for you will depend on several different factors such as how long you want to own the property for and what purpose you want the building to serve.

HOW TO CHOOSE A GOOD INVESTMENT PROPERTY

  1. Look for areas of the city that are growing.
    Population growth is a considerable factor in property investment. Look for areas in the city that are expanding.
  2. Invest in familiar areas
    Get to know the area you are thinking about investing in. You want to know your investment location as well as your own neighbourhood.
  3. Look for low vacancy areas
    When it comes to choosing an area to invest in, look for places with low vacancy rates. Investing in areas with a tight market, you can significantly increase your chances of finding the right renter quickly, and reduce the time between tenants.
  4. Think about the future
    It’s a great idea to find out what’s in the works in the area, so you can have an idea what the future looks like. It’s also a great idea to keep an eye on any residential developments that could be going up near amenities, such as schools and shopping hubs.
  5. Choose low-maintenance properties
    If you are looking to start investing and you don’t want to have to spend a lot of money in upgrades and renovations, look for a property that is ready to rent out immediately. However, be prepared to pay more for a fully finished home as someone else has built up the sweat equity getting it ready.
  6. Think about your tenants
    Choose a property that appeals to the people who are actively renting in that area; it will make it much more attractive. For example, a small apartment may be a more affordable rental property than a house, but if the local rental market is mostly families, your investment property might not be as appealing. Think about your tenant’s lifestyle… do they need parking, do they take public transit, etc.? This kind of questions should help when choosing a great investment property.

Bring in the professionals

I always suggest you speak to a professional Realtor (such as myself) when you are looking at an investment property. We can advise on which properties would be ideal for your investment portfolio. Want Market Information? Give me a call! (780) 904-4240

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