<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For conservative investors, the stock market holds huge risk. If that’s you, maybe you stick to high-yield savings accounts or low-cost index funds or ETFs. However, investors willing to take a bigger risk may invest in properties. Here’s how to buy investment property and potentially increase passive income.” data-reactid=”31″>For conservative investors, the stock market holds huge risk. If that’s you, maybe you stick to high-yield savings accounts or low-cost index funds or ETFs. However, investors willing to take a bigger risk may invest in properties. Here’s how to buy investment property and potentially increase passive income.
” data-reactid=”33″>How to Buy Investment Property: Types
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="There are many different types of investment properties. You could invest in commercial real estate, rental properties and real estate investment trusts. Consider uses including:” data-reactid=”34″>There are many different types of investment properties. You could invest in commercial real estate, rental properties and real estate investment trusts. Consider uses including:
Buying and renting: You could buy a single-family home as a second home and rent it out. You could also buy a multi-unit property and rent out individual units. In either case, you’re responsible for maintenance, repairs, collecting deposits, and handling background checks for tenants. If you buy the property in a desirable location, you could earn enough in rent payments to cover your mortgage and more. But you could also spend more time than you realize managing your new property.
House-flipping: This involves buying a home, often distressed and cheap, fixing it up and selling it for a profit. Many real estate investors are house-flippers. But if you pay too much, your renovations take too long to complete, or you incur an unexpected expense, you could end up losing money.
Real estate investment trusts (REITs): If you can’t scoop up individual properties, you might want to consider REITs. These companies own many properties that bring in an income. As a result, they let people invest in many different properties. Different REITs focus on different sectors, like apartments, healthcare facilities, and business complexes. Investors without a lot of experience or capital can still put money into REITs.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="How to Buy Investment Property: Funding” data-reactid=”39″>How to Buy Investment Property: Funding
how to buy an investment property
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Most investment properties require hefty capital. When buying a home to live in for the foreseeable future, you can find loans requiring a 3.5% down payment or less. When you buy an investment property, traditional financing and conventional loans require a 20% down payment.” data-reactid=”60″>Most investment properties require hefty capital. When buying a home to live in for the foreseeable future, you can find loans requiring a 3.5% down payment or less. When you buy an investment property, traditional financing and conventional loans require a 20% down payment.
You’ll also want to budget for the right project. For instance, if you’re planning to flip a house, estimate how long it’ll take to complete renovations and repairs. Also, figure out how much it’ll cost. Consider covering a few extra months of expenses beyond your original timeline. Over-estimating your time and money in case unexpected expenses can be wise. If a repair takes longer than you thought or if a pipe breaks during renovations, it wont sink your budget.
If you’re planning to buy your space for rentals, make sure you have enough money to finance unexpected repairs involving tenants. For instance, if a washing machine breaks or there’s a leak, a contingency fund can help fix it.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="How to Buy Investment Property: Credit” data-reactid=”63″>How to Buy Investment Property: Credit
If you want to build up your buying power, a solid credit score can get you there. A very good or excellent FICO score typically starts around 740.
If you don’t have stellar credit, you can still take out a loan for investment property. However, it could mean higher interest rates or different loan terms than you’d like. Cleaning up your credit may secure better loan terms. Consider making all minimum payments on time every month. Try to lower your credit use to 30% or less, though under 10% is ideal.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="If possible, pay off any outstanding debt that inflates your debt-to-income ratio. The lower your DTI, the better you’ll look to lenders.” data-reactid=”66″>If possible, pay off any outstanding debt that inflates your debt-to-income ratio. The lower your DTI, the better you’ll look to lenders.
The reward for investing in properties could be lucrative. Some investors that start real estate investing as a side-hustle make it a full-time job. In 2017, the average return on house-flipping was nearly 50%. Compared to high-yield savings accounts bringing in less than 2% APY, that’s a big difference in return on investment.
However, you may lose money. money. You might buy a home for more than you originally planned. Also, you. may put more money into renovations that take took longer to complete. Or your property could sit on the market for six months to a year. Each of those scenarios loses money. The longer your home stays up for sale, the more you’re paying in monthly mortgage payments, insurance and other related costs. Even with big reward comes potential loss. It’s important to keep that in mind, and in your budget, as you consider investment properties.
Before considering how to buy investment property, make sure your finances are lined up. Your credit score should be high, DTI should be low and funding should be secure before you even start browsing properties. You might need to enlist the help of a financial specialist to make sure you’re on the right track. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
If you’re figuring out how to buy investment property to rent out, you’re also taking on a new gig as a landlord. You might feel good about collecting rent checks every month, but be prepared to handle the unexpected. If you’re not managing the property yourself, you’ll have to hire someone to do it for you. If you are managing it yourself, you might need to devote more time and resources than you originally planned. With renovations, building codes, inspections and ongoing maintenance, being a landlord could be your new full-time job. Before you buy your new property, make sure you’re ready for it.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
