What makes a good real estate investment?
Many people looking to diversify their investment portfolios should ask themselves this pertinent question first. Any truly good investment comes with a certain degree of risk, but the adage of “no risk, no reward” comes to mind.
Mortgage requirements vary, but it is possible to purchase a property as a rental opportunity with a small down payment. If you are a cash investor, you should still pay attention to the points in this article.
Below are the top five strategies for investing in the Toronto real estate market:
1. Location, Location, Location
First things first – saying that three times fast in the mirror will not do anything, except make you doubt your sanity a little.
More importantly, this is a vital first step in your journey.
Investing in up-and-coming areas is a smart decision because you can often find a great deal before the masses descend. The location of your real estate investment will determine your overall profitability and success.
2. House Flipping
House flipping in Canada may sound simple, but it is crucial that you understand the market, manage finances, and accurately calculate profitability. The only way house flipping works is when a reasonable profit can be made.
Work with local, knowledgeable real estate agents to identify the best deals in the area. They will understand the niche market trends better than anyone else and be able to offer sound investment advice.
3. Buying Condo Rental Properties
Urban condo developments are an appealing option for investors looking for long-term growth and profitability.
As demand for housing grows in the Greater Toronto Area, investors can double down on their purchases and lease them to prequalified tenants.
To avoid the potential hassles that come with owning condos, consider professional condo rental management by Del.
Landlords are turning to rental property management companies to help them manage their investments and remove the common stresses that owners face.
4. REITs
REITs, or Real Estate Investment Trusts, are companies that own, operate, or finance income-producing real estate, such as offices, shopping malls, and hotels.
If you do not have the time, patience, or inclination to become a bonafide property owner, this type of investment could be right up your alley.
REITs function as an investment vehicle, working in a similar way to mutual funds, with one caveat – instead of trading shares of stock; you buy and sell shares of revenue-generating properties.
REIT property types can include farmland, cell towers, single-family rentals, storage facilities, and billboards.
5. Alternative Methods
Traditional real estate investments in commercial, industrial, or residential properties, with cash or mortgages, are not the only options available.
Alternative investments such as crowdfunding platforms or joining Mortgage Investment Entities (MIE), are two other ways to invest in real-estate-backed mortgages and receive a passive income stream.
MIEs pool funds from investors, provide mortgages secured by real estate and generate income by charging interest – which is then distributed back to the investors.
To End
A bustling city like Toronto has multiple real estate investment opportunities for savvy investors and buyers alike.
Implement these five actionable strategies above to uncover the best ways to diversify your real estate portfolio.
