The answer is “Right Now”.
“Don’t wait to invest in Real Estate, Invest in Real Estate and Wait” – Don Campbell
There is no better time to start.
With each passing day you are missing out on potential profits to be made. There is a ton of opportunity in many different Canadian markets (Don’t get swayed by what you hear on the news).
It is essential to remember is to pay attention to key market fundamentals and gather as much information you can on the market and type of investment you are looking to get into. But with the most common approach of ‘Buy and Hold’ there is no reason to wait – you have to get yourself into the game.
There is money being made every single day in real estate, (more importantly your money is not growing as fast as it possibly could when aren’t investing) – the first transaction is the hardest one!
I have been a real estate investor for over 7 years now, so maybe you can call me biased but I will answer this one using my own example.
One of the investments I own is a triplex in Hamilton, ON.
I purchased this home a few years ago, and it was sitting on the market for awhile because of ugly paint colours and some animal smells in the house. I paid about $185, 000 for it.
I had to do some cosmetic renovations to this property, I think I spent about $12, 000.
After all this, about two years later, I went to my mortgage broker and said, I would like to refinance. We got the property appraised for $283, 000 just TWO years later and I received a fat check for $85, 000. Not only did I get my downpayment back, but I also got back all the money I put to improve the property.
HOLY COW – Seriously?
We now owned the house and every penny that we had taken out of our pocket to buy and fix it was now back in our hands!!
That’s big, but wait, it gets better.
On top of the money that we had invested into the property, we still own this house and it cash flows $700/month
So just to bring this all together.
I now owned a property that I no longer had money invested in, it was worth tens of thousands of dollars more than the mortgage on it, and it was making $700 a month in positive cash flow.
So from this the answer to real estate investing faq number 2 is a resounding “YES, yes, and yes!”
This is a very common question. And the most blunt answer I can give is “It Probably Won’t”.
Only rarely do the stars align and everything goes exactly as you had envisioned before setting out on your journey.
You should look at realistic worst case scenarios to see if you are comfortable with them.
For example, one of the fears I hear often is “what if the poprety doesn’t get rented out for a long time”
Well I tell my investor clients, we have to be realistic in terms of time frames (it usually doesn’t happen in a few days or a week).
The other common fear I hear is, “what is the tenants damage my property and I’m left with thousands of dollars worth of clean up”
There are some questions to ask yourself in addition to the the real estate investing FAQ questions:
1. Is the property nice enough for someone to live in it?
2. Is it nice enough for people to genuinely be attracted to the place when they walk through the door?
3. Are other people in the area getting the same type of payment that you are expecting to get?
4. What is my plan to get someone into the home?
These are the questions that you should be asking yourself ahead of time so that you have an idea if your plan is realistic.
In this specific example the worst case is that you’ll have to lower the rent if you don’t rent it out. Remember, there are always tenants looking for nice places to live.
Account for that in your planning. If you have to drop the rent $100 per month how does that change things?
1. Will you still get appreciation?
2. Will you still get tax benefits?
3. Will you still get all or most of your mortgage payment, and property taxes covered?
If you look at the big picture is this still a very worthwhile investment?
It will be difficult to find a case where it is not – especially if you are honest with yourself at the beginning.
Things will rarely go as planned but account for the hurdles and have a plan.
The experiences of overcoming these hurdles is what investing is all about, it’s what life is all about.
They will make you a stronger person and looking back those hurdles will become small pebbles that in the future you will walk right over. And that is where the fun begins because bigger hurdles mean bigger rewards.
I think living in Southwestern Ontario allows us to have access to many areas that are all stable and have great economic fundaments. Moreover, unlike other provinces (Alberta for example) our economy is fairly stable and doesn’t go through hills and valleys in such extremes. So when talking to people I’m often asked if Toronto, Hamilton, or Barrie or anyplace else is the best place to invest.
The short answer is to look at the fundamentals of the market you are interested in. Yes, it all goes back to getting good real estate investing information.
It is hard to generalize an area as large as Toronto as a good or bad investment. There will always be pockets of both and the tough part is they won’t necessarily stay the same!
Are you starting to see a theme here?
With an investment property I would want real estate investing information.
Looking at real estate for the long term you will want to understand certain trends that may or may not be occurring. Things like:
1. Job growth
2. Population growth
3. Accessibility to public transit
4. Accessibility to highways
5. Demographic trends
It is important to know that these are the types of things that will have a large and lasting impact on your investment. This is the type of real estate investing information you are looking for.
There are some other more personal factors that come into the picture as well when you are looking at potential investment areas.
Many beginners want to be accessible to their properties to give them a sense of comfort. So if you live in Ontario you may not be as interested investing in Alberta as someone that lives there, especially if you’re just getting started.
Or you may not be comfortable with a certain neighbourhood because you want a different type of investment so you will stay away from there as well.
The key thing to remember is that the fundamentals of an area will speak volumes about its long term potential, and when looking at large cities it can sometimes be a big mistake to generalize them.