Making Money from Real Estate Investing – Proven Tips from Pro Investors
Since home prices in Canada are up on the rise, it is a good time for making money from real estate investing. According to some experts, the first quarter of 2021 is going to witness a surge of up to 10% in prices. But this pace is going to slow down and halt at 5% by the end of the year.
To make the most of this time, it is highly recommended to make your move and invest while you can. In this post, I will share some proven tips from pro investors to help you increase your wealth.
Making Money from Real Estate Investing
Invest in Rental Properties
Rental properties represent a great way to get involved with real estate investments. Emerging neighbourhoods offer growth potential and tax incentives for buyers. Buyers that purchase properties in emerging neighbourhoods maximize profits and ensure that their income covers their costs.
-Ralph DiBugnara, President of Home Qualified
Rental properties are always a good mode to invest and receive a continuous share. There are two outcomes from investing in a rental property; (a) you receive rentals on a monthly basis and (b) your home’s value is increasing, giving you an additive benefit of gaining profits when your resale the property.
It may be argued that today in Canada’s real estate market, rental properties are less popular. Whereas buying a new home is the new trend. But this trend is going to switch soon when the government opens up for new immigrants.
Spread Your Investment
By considering investments in other states and cities you’ll have a large pool of available investments and ultimately better opportunities. Investing across a large geographical area also further diversifies your investments and protects your portfolio against the volatility of local markets.
Jeff Miller, real estate investor and co-founder of AE Home Group in Maryland
It is always advisable to spread your investment in different areas. If one is not returning a profit, the other would.
Similar is the case with real estate investment. If you have a hefty amount to invest, spread your investment wisely.
For instance, if you have $1.5 million in hand, buy a bungalow in Oakville not exceeding $1.3 million. And invest the remaining $200,000 in real estate investment trusts (REITs). After a year or so, register your home with a bungalow for sale in Oakville listing company, make a profit margin, and reinvest it to acquire another piece of property. While your REITs stays active.
There are countless ways where you could secure your investment by investing portions in different real estate segments.
Invest in Single-family Homes
After COVID-19, it is the new norm to live in a single-family house rather than a condo. These single-family houses are spacious, good for a family, and are better-returning properties.
Single-family homes are your safest bet for attracting the correct tenant. Everyone would love to live in a house. Some people just cannot afford to or do not want to own. The single-family home historically has over the last hundred plus years always appreciated.
Don Wede, President of Heartland Funding Inc.
However, it does not mean that single-family homes have totally replaced condos. If condos are facing a dipping trend as of now, the market would rebound. Consider this when Canada would soon inviting immigrants back. These immigrants would be needing an affordable place to live. And what better you could offer than a condo.
Buy and Hold
I buy on the assumption that they could close the market the next day and not reopen it for five years.
As it sounds, buy and hold properties are your long-term investment. You buy a home now, hold it for (let us say) 5 years, and sell it at a profit margin.
Real estate investing is always profitable as it is one of the areas that cannot stay down for long. This could be supported by CREA’s stats when the sales witnessed a drastic dip in Q2 of 2020. But later that year, the market not only rebound but it made some enormous profits.
However, what purpose your house would serve during your holding period? If unoccupied, it is not worth an investment. Here you could apply tip one i.e., to rent it out till the time you resell the house.
Invest in Flipping Homes
While house-flipping activity declined during 2020’s third quarter, profits soared to their highest level in 20 years, reports ATTOM Data Solutions, and the median price of a flipped home was $240,000 during that time. Meanwhile, the gross profit on the average flip was $73,766 during last year’s third quarter. That’s up from $69,000 in 2020’s second quarter and $61,800 during the third quarter of 2019.
MaurieBackman, Blogger at Fool.com
Flipping homes is relatively new. It is the idea to acquire a property for less, renovate it, and sell it for a profit. Here, your holding period is to remain low and is the time where you spend a little more makeover the entire property.
Once your work is done, you list it for bungalows for sale and sell it at a profit.
The only challenge comes when your house is not sold on time or not for the return you were expecting. Here you need to be extra smart. Do not buy a property that no one would ever like to buy. And do not spend too much on its renovation.
A good approach is to buy when everyone is selling (this is the time where you could negotiate with the price), acquire the house in a friendly neighbourhood, renovate only where it is required, and resell the house when everyone is buying (time is in your favour).
Invest When Interest Rates are Low
When investing in real estate, it is important to learn about and become an expert in your selected market. Being well informed on the current trends, including any decreases or increases in the average rent, income, interest rates, and even unemployment/crime rates will allow you to recognize the current market status and plan for the future.
SachaFerrandi, Founder Source Capital Funding, Inc.
Being able to constantly forecast and stay a step ahead of the market can help lead you to become a more effective real estate investor
The past year has been good for home buyers (only if the inventory was high). Interest rates are marginally low and are expected to remain low for quite some time.
That is the time when you could think of investing in real estate and make money in the longer run.
A good idea is to pay at least 20% as your downpayment to avoid paying hefty mortgages. When you acquire a new house on a mortgage, you could either rent it out or occupy it.
Lend and Earn
Hard money lending is the strategy of making short-term loans to real estate investors who buy rentals or fix-and-flip properties. Usually, the loans involve high-interest rates, points (i.e. upfront fees), and lower loan to value ratios.
Chad Carson, Blogger at CoachCarson.com
Have you ever thought of lending your hard-earned savings to a private company? Lending to private companies is somehow a good way to get high returns. They usually work in the same way as listed (public) companies do. The major difference is that you could always meet and negotiate the terms with the owners of the private company.
The same rule could be applied to lend your savings to private builders. They will pool in the incoming amount, invest in a project, sell it, and would distribute your profit share.
These investments are less risky as real estate is everblooming. The challenge is that you need to wait till the property is sold. And your investment could take six months, a year, or maybe more till it is matured and converted into profits.
All you need to do is to make sure the investment terms are in your favour.
While the decision is always crucial to invest in real estate to make money, it is no doubt one of the best decisions of your life. My closing remarks would be pretty straight forward; research the market in depths, before you invest your hard-earned cash. And once you found your targeted area, just invest. It is just like T. HarvEker said:
DON NOT WAIT TO BUY REAL ESTATE, BUY REAL ESTATE AND WAIT