Do your resolutions for 2022 include investing in real estate? There’s a number of different property types in the local market, and selecting the right one could help you achieve a strong return—and build an impressive portfolio. Of course, doing it well requires a bit of helpful real estate knowledge.

If you’re planning to invest in property this year, here are a few tips for your next step…

Consider new condo developments

Buying a pre-construction condo may be one of the best investment decisions you ever make. For one thing, purchasing brand new can help you budget effectively and obtain the best possible return. Unlike with resale purchases, you know the price you’re going to pay ahead of time—so you can’t get caught up in a costly bidding war.

It’s also worth noting that your investment will begin appreciating right away. You’ll pay today’s prices for a unit that will tend to be far more valuable by the time it’s completed. You’ll also usually be able to rent it out for more than the current rental value at that point, enabling you to maximize potential profits.

There are many other reasons to consider investing in pre-construction: the fact that you can select finishes and appliances that wow prospective renters to the (often) lower maintenance fees associated with new buildings. If you decide to take the plunge, there are some steps you can take to help ensure you make the most of your investment.

To start with, the neighbourhood you choose matters. An up-and-coming area (or one that will be the site of a new business park, for example) is likely to attract many tenants with access to funds for rent. For any area you’re considering, you should also learn what landlords are charging for similar units nearby. This step will help you determine what you can reasonably charge. From there, you can start doing the math to get a sense of your potential return (a knowledgeable financial professional can help).

Lastly, don’t forget to do your research to make sure the developer you’re thinking about working with is reputable. F3inding an agent who knows the local market and industry players is key!

Do you want to invest in real estate but feel concerned about the changing market? Here are some resources to help you make the best choices:

• The Market Is Changing. Is Real Estate Still A Good Investment?
• How To Sell An Investment Property
• Are Conditional Offers Making A Comeback?

Leverage your equity

 Your home may be your most significant investment. Why not make it work for you by tapping into your equity and investing in another property? 

You may be able to borrow as much as 80 per cent of your home’s appraised value and put it towards a down payment. The result will be a less hefty mortgage on the investment property (or no mortgage, depending on your circumstances). Not only that, but when you repay the loan, you’ll likely only have to cover the monthly interest—and if you want to pay it off quickly, you won’t have to worry about pre-payment limits.

One of the best ways to take this step is through a home equity line of credit (HELOC). This type of loan, which is secured against your home, provides a revolving line of credit. You can obtain funds, pay them back and borrow again (up to a certain limit). 

One of the biggest advantages of a HELOC is, you’ll only pay interest on the amounts you use. It takes some of the risk out of borrowing to buy an investment property.

Consider homes with a secondary suite

If you’re thinking of purchasing a new primary residence in the near future, consider investing in one that has space for a secondary suite. As the demand for housing grows, so does the need for this home type. One popular example is a bungalow with a spacious basement. So long as you can add a separate kitchen, bathroom and entrance (and meet the zoning requirements), you’re good to go.

Put simply, having a separate, self-contained rental residence within your home allows you to bring in extra monthly income without having to purchase (and manage) a separate investment property. 

The best part? If and when you decide to sell your home, you’ll enjoy the added value that a secondary suite can bring. These properties tend to receive higher appraisals, and many buyers are eager to purchase them. If you never sell and you’re on a fixed income one day, your suite can also help you bring in money every month and continue living independently.

Thinking about purchasing an investment property? Consider brushing up on your buying knowledge with some of these resources:

• Hidden Costs of Buying a Home You Need to Know
• What Not to Compromise on When Buying a Home
• The Team Approach to Buying a Home

Know your responsibilities

Part of owning an income property (or more than one) is acting as a landlord. To ensure that this process goes smoothly, it’s important to be prepared. Here are a few things to keep in mind.

First off, there are some questions you’ll want to ask yourself before acquiring a tenant. One of the biggest is, do you have the bandwidth to manage the property yourself, or will you be relying on a property manager? Consider the time and knowledge requirements carefully.

Next, be aware that screening tenants is crucial. Protect yourself by performing credit checks and speaking to relevant references (including employers and past landlords). You should also ask potential renters plenty of questions to get a sense of their character and circumstances.

In addition, you’ll want to ensure that you know your rights and responsibilities. Reviewing Ontario’s Residential Tenancies Act will help ensure that you go into becoming a landlord with all the information you need. 

Are you ready to start growing your real estate investment portfolio? We can help you find the perfect property—simply get in touch to get started!