Here are a few things to consider before you make a real estate investment:
Is now the right time?
Ultimately, investing in individual properties is a speculative endeavor — a kind of high-risk investment that can result in outsized gains, or catastrophic losses. And while there are smart ways to make these investments, this is an incredibly risky time to be entering an already risky investment.
It’s no secret that the housing market is hot right now. It’s overheated, in fact. Recent data shows that home prices are setting records, particularly in highly populated areas like Washington, and inventories of available homes are at rock-bottom levels. It can be difficult to find a primary residence to own, much less to make an investment in.
While low interest rates have fueled a lot of this demand, they’ve also generated a lot of competition. Real estate investors are not only competing with everyday home buyers, but also corporate investors with deep pockets. With so many dollars chasing so few properties, you’ll probably pay a premium price, which dramatically curtails your potential profit margin. If the economy takes a downturn or interest rates rise, the property could depreciate for reasons entirely out of your control.
That’s to say nothing of the usual risks and costs in real estate investing. Property maintenance is expensive, and tenants can be unruly. Taxes, insurance and laws pertaining to real estate can be complex. Any investor seeking a healthy profit margin will need to prepare for these potential challenges.
Know the trends
If you’re considering an investment in real estate, now or in the future, it pays to have a good understanding of the trends that drive real estate values. For example:
· Prices: You should be aware of the historical pricing trends for any property or location. Are they increasing, or are they depressed?
· Demand: Whom is buying in your location and is demand increasing?
· Comparative sales: Are sales of similar properties being made at a faster pace?
There are a few other questions that can help you gauge a property’s value, especially if you plan to purchase a rental property. Successful real estate investors are highly knowledgeable about these trends.
· Rental trends: How many rentals are nearby, and what are they renting for?
· Future development: Will there be changes in the building or location that could make future values rise or fall?
· Occupancy rates: Are building occupancy levels increasing or decreasing?
· Interest rates: What is the outlook for interest rates and their potential impact on demand?
Don’t risk what you can’t lose
Real estate investments typically involve large sums in single properties, and the risk of huge losses is significant. For that reason, real estate only works for investors who can tolerate the volatility — both financially and emotionally. They must understand the risks involved and, in turn, have positioned themselves to withstand the potential losses.
Perhaps even more importantly, real estate investors need to have the intestinal fortitude to look long-term and push through volatility. Keeping the right mind-set is key to not letting your emotions push you into poor investment decisions.
It may be easier said than done, but patience and planning are essential. Setting realistic expectations and managing them when it comes to the appreciation of your property can help you realize profits. Even when sales are moving quickly, don’t rush and find yourself in a bad investment.
David Mount is a director with the Wise Investor Group at Robert W. Baird & Co. in Reston, Va. Baird does not provide tax, legal or real estate advice, and does not provide or service mortgages.
Canadian Real Estate Prices To Fall More Than Expected: Desjardins – Better Dwelling – Better Dwelling
B.C. ‘clear’ there’s not enough housing as Vancouver encampment ordered dismantled
VANCOUVER — British Columbia’s acting attorney general says the province was “clear” with Vancouver officials that the Crown corporation responsible for subsidized housing does not have enough spaces available for people who are being told to dismantle their tents along a street in the city’s Downtown Eastside.
Murray Rankin, who is also minister responsible for housing, says housing is a human right, and the “deeply concerning scenes from Hastings Street demonstrate how much more work we have to do to make that a reality for everyone in our communities.”
Rankin in a statement Friday says BC Housing has accelerated efforts to secure new housing for encampment residents including pursuing new sites to lease or buy and expediting renovations on single-room occupancy units as they become vacant.
He says BC Housing is aiming to make a “limited number” of renovated units available next week, with more opening later in the fall.
Vancouver fire Chief Karen Fry ordered tents set up along Hastings Street sidewalks dismantled last month, saying there was an extreme fire and safety risk.
Police blocked traffic Tuesday as city staff began what’s expected to be a weeks-long process of dismantling the encampment but little had changed by the end of the week with most residents staying put, saying they have nowhere to go.
The city has said staff plan to approach encampment residents with “respect and sensitivity” to encourage the voluntary removal of their tents and belongings.
Community advocacy groups, including the Vancouver Area of Drug Users and Pivot Legal Society, have said clearing the encampment violates a memorandum of understanding between the city, the B.C. government and Vancouver’s park board, because people are being told to move without being offered suitable housing.
The stated aim of the agreement struck last March is to connect unsheltered people to housing and preserve their dignity when dismantling encampments.
The City of Vancouver may enforce bylaws that prohibit structures on sidewalks “when suitable spaces are available for people to move indoors,” it reads.
The province is not involved in the fire chief’s order or the enforcement of local bylaws, which prohibit structures on sidewalks, but it is “bringing all of BC Housing’s resources to bear to do what we can to secure housing for people, Rankin said.
“I recognize the profound uncertainty and upheaval people impacted by the fire order are facing, and we will provide updates on this work as we have news to share,” he said.
Rankin, who had been serving as minister of Indigenous relations, was appointed acting attorney general after David Eby stepped down to run for leadership of the B.C. NDP.
This report by The Canadian Press was first published Aug. 12, 2022.
The Canadian Press
Mismanaged real estate deals land B.C. lawyer two-month suspension – Business in Vancouver
Mismanaged trust accounts have landed a ban on residential real estate conveyancing for a B.C. lawyer.
A Law Society of BC tribunal panel has suspended Surrey lawyer Serf Grewal after determining he unintentionally misappropriated tens of thousands of dollars of trust funds.
Grewal was found to have committed several breaches of law society rules, largely related to real estate. As such he’s also been barred from future residential real estate conveyancing.
“The proven misconduct,” stated the society, “includes unintentional misappropriation of slightly over $42,000 of client trust funds, due to trust shortages and accounting errors, mishandling of a further $3,770 of client trust funds which resulted in a trust shortage that he did not report to the law society, improper withdrawal of $5,500 held in trust for fees before delivering bills to the client, failure to comply with accounting obligations over a four year period, and improperly commissioning an affidavit by not personally witnessing the attestation.”
Grewal’s suspension was said to be curtailed from what may have been a longer one, granted there was “evidence establishing that none of Grewal’s misconduct arose from dishonesty or deliberate misconduct for personal gain.”
As well, “the panel also considered evidence of a clear connection between Grewal’s misconduct and mental health issues related to childhood and personal trauma, and that the consequences flowed from his decision to report that trauma,” noted the society in a statement Aug. 10.
Grewal was also ordered to undertake trust account supervision and educational courses.
He claimed his annual income was in the range of $45,000 to $50,000 and so the tribunal panel afforded him 16 months to pay $9,000 in costs.
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