Real estate investing comes with highs, lows and everything in between.
After some hard-learned lessons in 2007, followed by more than a decade of success, I’m sharing 12 practical insights I wish I knew at the beginning of my journey.
Rule No. 1: Speculating is not investing
In the world of real estate investment, you’ll find two kinds of individuals, speculators and investors.
Speculators buy property, hold it for a few years, make quick improvements then hope to sell for a profit one or to years later. If the housing market turns sour and they want their money back early, speculators can face devastating losses. Speculation is basically gambling.
I learned this rule the hard way. In 2007, I purchased some presale high rise condominiums in Kelowna. By the time they were completed in 2010, their market prices had dropped by more than my initial equity. I was deep underwater and forced to close, leading to my first humbling real estate “tuition” payment of $150,000.
Investing is a far wiser strategy. Investors know that trying to time the housing market is nearly impossible. They also know housing prices typically trend up over time. Regardless of where you’re at in the market, a property that produces positive cash flow and lets you pay down the mortgage on a long-term horizon generates a solid return on investment.
So, keep your head up, relax those shoulders and focus on the long haul.
Rule No. 2: There are no good or bad markets, only good or bad tactics
Some tactics work best during a slump. For example, trading up when higher-priced homes get hit the hardest. Or creative deal-making like seller financing where the buyer mortgages a property directly from the seller.
Those same tactics will not work in a boom market. When the market is trending up, it’s usually best to use a “buy-fix-sell” strategy.
During recovery periods—between the end of the slump and the beginning of the next boom—buy and hold, rent-to-own or make agreements for sale (similar to using call options in the stock market). Recoveries are also great times to launch new real estate development projects. The key is always knowing where you’re at in the market cycle. The housing market always cycles from boom to slump to recovery, in that order. If you’ve been in a slump for a while, get ready because a recovery is almost inevitably on the way.
Rule No. 3: Your team matters
One of the top reasons I joined Canada’s Real Estate Investment Network, was to rub shoulders with professionals who specialize in real estate investment. Growing my network, then building out my own dream team, was one of the biggest contributing factors towards my success in real estate.
With a team of real estate services professionals at your side, you’re more likely to achieve your goals in a shorter time.
First, find an investor-focused realtor and ask them to refer you to trusted mortgage brokers, lawyers and insurance agents. Add in an ace property manager and you’ll have a dream team that can leverage you to your highest of heights.
Having the right people on your side is the difference between buying a couple of properties with varying success and building a well-oiled real estate machine that produces fantastic returns but doesn’t consume your life.
Rule No. 4: You get what you negotiate
A sharp real estate agent can get you a great deal. But to truly thrive in this market, you’ll need to attain mastery in the art of negotiation.
Check your ego and your emotions at the door and allow the process to unfold over time. Never be in a rush to close, and never slam the door on a counter-offer. Remember real estate negotiations aren’t always about price. When it comes to value, the terms of the deal are often more important than the dollar amounts.
Find out what’s important to the other side and try to help them solve their problems, while creating a wonderful situation for yourself. Dates, inclusions, improvements and even financing options are all up for negotiation. If you ask, you just may receive.
Rule No. 5: Find your niche
Don’t try to be an expert in everything. Instead, focus on a particular property type, then study until you become an expert in that niche. It could be homes with basement suites, condos that allow short-term rentals, multi-family units or commercial properties. The key is to find your groove, double down and master it.
If you invest into a mixed-bag of properties, it’s extremely difficult to build a resilient portfolio, negotiate the best terms and produce great returns. When you only focus on one niche, you’ll become more confident and shrewd with every new deal, and each one will turn out better than the last.
Rule No. 6: You don’t have to invest where you live
Most people like the idea of being able to drive over to their investment property and kick the tires, so to speak. While it might feel reassuring owning assets in your hometown, they might not actually be your best investment options.
Look for opportunities in markets showing strong economic fundamentals so—over time—you can increase your rental rates, property value and cash flow. For example, cities with strong economies, job growth and relatively lower home-price-to-income ratios will yield the best returns.
Your own home town might be nearing the end of a boom cycle, but cities one or two provinces over might be coming out of a lengthy slump. On a five-year horizon, you might find far more attractive opportunities in a neighbouring province purely because of where they are headed in the market cycle.
Once you find an opportune place to invest, a strong team of local professionals can help you make smart investment choices—without requiring constant travel.
Rule No. 7: Graduate for economy of scale
Once you’ve mastered single-family homes and have reached the limits of bank financing—which usually happens at five properties—look into multi-family properties so you can achieve economies of scale. When you own multiple units in one location, you’ll have far lower per-unit costs for ongoing expenses, like roof repairs, landscaping maintenance and HVAC repair.
Quality investment properties streamline and simplify your real estate investment portfolio.
Rule No. 8: Big numbers do not always mean big risk
A $1 million fourplex carries less risk than a $500,000 home. And a $5 million apartment building is less risky than a $1 million fourplex. That might seem counterintuitive at first, but it comes down to the mathematics of diversification.
When you have more units available for rent, you minimize the probability of falling into a negative cash-balance situation due to tenant vacancy. For example, if you own a multi-family property, three out of your eight units could suddenly become vacant and you’d still have enough cash flow to cover your mortgage. But if your individual apartment or single-family house suddenly has no tenant, you’re on the hook for paying the entire mortgage payment until you find a suitable tenant.
Rule No. 9: Master joint ventures
Eventually, you’re going to hit a limit on what you can accomplish as a solo investor. Everyone runs out of one of the three key ingredients you need to expand an investment portfolio.
Capital for a down payment is the limit most investors run into first. After you’ve deployed your liquid capital, it takes a long time to save up for another down payment.
Access to financing is the second problem, because individuals can only borrow so much money from a bank at one time.
The third ingredient is time and expertise. You can only stretch your own personal resources and knowledge so far.
When you reach one of these milestones in your journey, it’s time to embrace the art of joint ventures.
For every person out there flush with cash, but lacking time or expertise, there’s another cashless person with the knowledge, skills and bandwidth to execute your plan. These are the matches made in heaven that can launch your investment career to new heights.
Rule No. 10: Cash is king but cash flow Is queen
We all know that cash is king, but cash flow is what really helps you achieve your financial goals.
With $500,000, you can buy a new highrise condo, rent it out at $3,000 per month, but still end up in a negative cash flow situation. But that same $500,000 invested in a $2 million multi-family property can bring you close to $15,000 in monthly revenue. That’s five times more revenue per month to help you live the lifestyle of your dreams.
Rule No. 11: Force appreciation
Boosting value through home improvements is one of the best aspects of real estate investing.
Complete “low-hanging fruit” renovations like flooring, sidings and fresh paint to quickly increase your property’s curb appeal. Next, invest sweat equity into your income property in the form of landscaping, gardens or other yard projects.
With certain properties, you can unlock even more value through property development, such as adding a secondary suite or rezoning the land for commercial use.
Even if you’re financing has hit a limit, you can increase your portfolio value through strategic improvements.
Rule No. 12: Hold for wealth
You can make good money by buying, fixing and selling properties. So good in fact, some people do that as their full-time job. The problem for those folks is they rely on those profits to live. Real estate flipping ends up occupying all of their time.
In a boom market, real estate can generate serious short-term profits, but the inevitability of an impending bust market means the real magic happens by holding on to solid assets over time.
Remember, real estate investments typically double every 15 years. By simply holding onto real estate for decades, you can create multi-generational wealth.
AJ Hazzi is a real estate coach, investor, and team lead of Vantage West Realty – an independent group of Kelowna realtors, known locally for five-star experiences and the “Guaranteed Sale” program.
If you’d like personalized advice about how to manage or build the real estate portfolio of your dreams, please feel free to reach out for a private consultation.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
