New real estate investors have a lot to think about before embarking on their journey. Canada enjoys one of the hottest housing markets in the world, even in the aftermath of the Coronavirus pandemic. What’s more, the Canadian real estate market is not only heating up in major urban centres such as Toronto, Vancouver, Montreal and Ottawa. Small cities in the Prairies and Maritimes, and rural communities country-wide are generating a big buzz in today’s economy, which means the potential for a windfall.
But smart investing involves more than shelling out a down payment on a house or a condominium. It requires industry know-how, investing prowess, patience and initial capital. When you are beginning, it can be an overwhelming experience.
Don’t know where to start? Here are eight essential tips for new real estate investors:
#1. Ask Yourself These Questions
Real estate investing requires a heavy commitment. It is not something you can decide overnight. From upfront capital costs to taxes to various expenses associated with owning a property, real estate investors are forced to take on a lot of responsibility.
Therefore, before you initiate the process of investing in the housing market, ask yourself these questions:
- How much money are you planning to invest in real estate?
- Do you have good credit?
- What is your personal financial situation like?
- What funds will you use for a down payment (retirement, savings, investments)?
- How much debt do you plan to take on (if any) in order to finance your investment?
- Do you have any experience in real estate investing?
Real estate investing is not easy, and it will occupy some time. Make sure you’ve thought through the hard questions before you begin, to ensure that you’re starting your journey with enough foresight and the necessary resources at hand.
#2. Know How You’ll Be Generating Your Income
When you are investing in real estate, there are several different ways of generating an income. Here are the four primary methods:
- Appreciation: A property increases in value amid changing real estate conditions.
- Ancillary: This is when you have a mini business within a larger real estate investment, such as a vending machine in a laundry room in the apartment building.
- Cash Flow: You collect a stream of cash from a tenant.
- Commission Income: Real estate specialists earn a commission on properties they helped a client buy or sell.
When selecting a market to purchase in, or a property to buy, consider the amount of income that you’ll potentially receive through each of these streams. Is it worth the initial investment?
#3 Order Home Inspections Before Buying
Home inspections are a critical component of buying a property. In a red-hot real estate market, a growing number of potential homebuyers are foregoing this essential step so they can and the home almost immediately. This could be bad news.
Home inspections are crucial because they raise any red flags, such as repairs and renovations, that could cost you a lot of money once you receive the deed to the property.
How devastating would it be if you learned that the foundation needs to be fixed? This would set you back as much as $10,000, which is nothing to sneeze at – especially when you’re a beginner investor.
#4 Get an Appraisal
Property appraisals are just as important as home inspections because they inform you what the home is worth, using analysis from past, current and predicted future valuations. Moreover, if you are renting out the property, an appraisal can provide you with a ballpark figure of how much to charge per month.
#5 Focus on One Property
In the world of investing, it is recommended that diversification is the key to success. But while this is sound advice, it does not apply to real estate investors when they are starting out.
When you are beginning your real estate investment journey, it might be prudent to concentrate on one property at a time. Allocating your time and energy to more than one house or unit may prove challenging when you’re just starting out, and increases the risk of making costly mistakes.
#6 Consider Exit Strategies
Like shares in a stock or units in a mutual fund, you need to have an exit point. Once an investment reaches a certain point, you can hit the ‘sell’ button and enjoy the profits.
What is your exit strategy with your real estate investment? This is a pertinent question to put forward when you are just starting out, because you do not want to risk losing when you are on top. From a market crash to a new tax, there are many different ways someone can lose their investment, even when it seems like you’re set to experience a big win.
Most savvy real estate investors will advise you to define your exist strategy before you’ve even purchased the property. Some of the most common real estate investment exist strategies include:
- Fix & Flip
- Buy & Hold
- Seller Financing
- Rent to Own
Learn about your options and based on your timeline and resources, consider which strategy will bring you close to your financial goal.
#7 Know Your Tax Laws
Taxes on real estate investing are complicated. Hiring a tax attorney, real estate lawyer, or accountant for your property is an investment that will pay dividends in the future.
Should you choose to go solo, it would be prudent to have a fundamental understanding of the tax laws in place regarding real estate investments.
Here are some basic elements of real estate tax law in Canada. This should not be taken as legal advice, and it is always recommended that investors consult a lawyer, but this list should give you some things to think about:
- When you purchase a property, you pay a provincial transfer tax, which varies from province to province.
- New home acquisitions are subject to the GST.
- The Canadian Income Tax Act slaps a 25 per cent penalty of the gross property rental income per year.
- Investors can usually deduct two kinds of incurred expenses: capital expenses and operating expenses.
- Non-residents selling a Canadian property are mandated to give the federal government 50 per cent of the sale.
#8 Have Six Months of Money Reserves
One of the best pieces of advice anyone will ever give you when it comes to real estate investing is to have a minimum of six months of money reserves per property.
Even if the housing market is soaring or your investment has been reliable for the last 18 months, it is always fiscally responsible to have reserves at hand. The market could slump at any time, it could take time to find a tenant, or an emergency repair may crop up. With an adequate reserve fund, you’ll have enough cash to ride it out through any of these scenarios.
This cash, which could also be placed in a yield-bearing account, will prevent you from accessing credit markets, too.
Real estate investing has become a popular method of making money in a zero-interest-rate economy. Because the cost of borrowing is so cheap and the Canadian real estate market is booming, there is a great deal of interest in buying and selling properties, from semi-detached houses to one-bedroom condominiums. It can be a challenging experience when you are starting, but it can also be highly rewarding and profitable.
For more information on smart real estate investing tips, or for advice on which markets are ripe for investors, reach out to your local RE/MAX agent today!
Canadian commercial real estate services firm acknowledges cyberattack – Saskatoon StarPhoenix
Article content continued
The spokesperson was mum when asked to confirm if the attack was ransomware, that files had been copied, whether the information affected was corporate or personal, and, if personal, did it involve current and former employees.
In its most recent quarterly financial statement for the period ending September 30, 2020, Colliers said it had a net income of just under $32 million on revenues of just over US$692 million. According to its 2019 financial results at the beginning of last year, it had about 15,000 employees.
Colliers performs a number of services for real estate firms including property management, sales and appraisals as well as tenant representation.
The Netfilim website entry for Colliers has the headline “Part 1,” suggesting the two files it has posted proves the firm was compromised and could be followed by more trouble.
According to Brett Callow, a British Columbia-based threat researcher for Emsisoft, Nefilim was first noticed in the spring of last year and has since racked up a string of enterprise-space victims including Whirlpool, MAS Holdings, Luxottica and Australian logistics company Toll Group. “Unlike most other big game-hunting groups, Nefilim appears to be a closed shop rather than a ransomware-as-a-service provider, which may explain why the group is less active others,” he said in an email. “The group typically uses Microsoft RDP (remote desk protocol) and other public-facing applications for initial access of victims. Frequently, it also exploits unpatched versions of Citrix’s Application Delivery Controller going after CVE-2019-19781.”
Local firm anticipates Spring surge in Fort Saskatchewan real estate market – Mayerthorpe Freelancer
Article content continued
“Looking at the cyclical nature of the real estate industry, combined with suppressed demand during lockdown, we’re going to see an uncapped demand. People are antsy and they want to get looking for their new home.”
Revere Real Estate is a local real estate firm, tracking market trends in order to give their clients the best home-buying experience possible.
Records have been set in real estate throughout COVID, including in November 2020, which Blais pointed to as an “historical month,” with an increase in sales of 27 per cent over the same timeframe in 2019.
Similarly, October 2020 home sales in the Edmonton region grew by 26 per cent compared to the same month in 2019. “The numbers we saw were unheard of for the fall,” he said. “November is typically the month that things really cool off, but sales remained steady.”
The new surge could prove hugely beneficial for Fort Saskatchewan, specifically, Blais said, as suburbs and more rural areas surrounding Edmonton could see significant real estate gains through COVID.
“Anecdotally, I was helping a client out in St. Albert look for a home in the range of $450,000, and every home we identified had offers accepted within three days of going to market,” he said. “It was crazy, and I think we’ll see that again in certain areas in and around the city.”
Noting that similar experiences are being had in Fort Saskatchewan, Blais pointed to anticipated growth in the Fort come the spring. “There’s quite a bit of development that continues outside of the City of Edmonton, and we’re also seeing what I call ‘perpetual urban sprawl’ in Edmonton,” he explained. “Developers have met that demand pretty well, expanding into regions that used to be farmland, so you can now get into single-family homes for under $425,000 just west of the city.
Canadian pension funds hunt for pandemic real estate bargains – CTV News
Canadian pension funds are seeking to boost their real estate investments, betting the slumping property market will recover as the COVID-19 pandemic recedes and office workers and city dwellers return to downtown properties.
Canadian pension funds held $278.7 billion in property assets in 2019, up 4% from 2018, according to the Pension Investment Association of Canada, making them the country’s largest real estate owners.
In a world of slower economic growth, very low interest rates, volatility in equity markets, real estate offers an attractive opportunity for pension funds, which take a long-term investment horizon, say market participants.
“We’re looking for buying opportunities,” said Hilary Spann, head of Americas real estate at CPP Investments, which manages $456.7 billion. CPP’s real estate portfolio generated 5.1% return for the year ended March 2020.
CPP announced a U.S. joint venture with Greystar Real Estate Portfolio to build multiple separate housing units this month, a deal that was initiated pre-pandemic.
In November, it signed an agreement with Hudson Pacific Properties to acquire an office tower in Seattle. Spann said a lot of buyers that would have been competitive in the Seattle deal were temporarily on the sidelines. “So we were able to step in and pick up that asset at yields that we thought were quite attractive.”
OFFICE VACANCIES CLIMB
As the pandemic forced many staff to work from home, the office vacancy rate in Canada hit a 16-year high of 13.4% in 2020, according to data from broker CBRE. Downtown offices were hit harder.
“I think pension funds are very well aware that…there are times when values dip a bit and vacancies go up but overall real estate assets are a great part of any pension fund portfolio,” Paul Morassutti, CBRE Canada vice-chairman said.
CPP’s Spann said while both rental markets and office may suffer in the short-term, it was expected that both markets would return when the pandemic comes to an end.
“Office may fall in the short term but in the long term, as everybody does start coming back to the office, I think it’s fair to say you may see a reversal,” she said, adding that the things that made places like New York and San Francisco vibrant will remain.
Kristopher Wojtecki, managing director for real estate at PSP Investments, told Reuters the fund had been increasing exposure in select sectors including single family rental and production studio real estate during the pandemic.
However, Canada’s second-largest pension fund, Caisse de depot et placement du Quebec, is taking a contrarian approach. A spokeswoman for Ivanhoé Cambridge, the real estate subsidiary of Caisse, said the fund is cutting exposure in traditional asset classes and prioritizing opportunities in growth sectors which include logistics and residential office buildings among others.
Grant McGlaughlin, partner at law firm Fasken, said he did not see any drastic moves on pension funds getting rid of their real estate portfolios.
“I think that’s the right thesis that there is no point selling into a low,” he said.
Which Maple Leafs could replace Joe Thornton on the top line? – Sportsnet.ca
Resident Evil Village releasing on PS5/PS4, Xbox Series X/S, Xbox One and PC on May 7 – MobileSyrup
Vaccine delay left Barrie’s Roberta Place home vulnerable to COVID-19 outbreak – The Globe and Mail
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Galaxy M31 July 2020 security update brings Glance, a content-driven lockscreen wallpaper service
Economy17 hours ago
Facing green push on farm, fertilizer makers look to sea for growth
Science22 hours ago
A Habitat at Ceres Could be the Gateway to the Outer Solar System
Business24 hours ago
Bank of Canada warns surging loonie could pose risk to economic outlook – Financial Post
News17 hours ago
Newfoundland government to fund refinery as search for buyer continues
Economy18 hours ago
Canadian annual inflation rate slows in December amid renewed COVID-19 restrictions
Health18 hours ago
B.C.’s COVID-19 cases trending in right direction
Business19 hours ago
Ottawa to delay second doses of COVID-19 vaccine as supply dwindles
Business22 hours ago
Quebec vaccine plan may be rethought after troubling Israeli data, says provincial advisor