Guide to Real Estate Investing

Real estate has long been considered a conservative, long-term strategy to growing wealth and like any other investment there are some simple principles to follow.

* Learn all you can. Before committing your cash, you should have a fundamental understanding of real estate. For example, be aware that, in general, investment properties are not liquid investments or liquid assets. Barring exceptional circumstances, real estate does not sell at a moment's notice. It could take days or months to sell a property, depending on the strength of the market in a particular area and the economy.

* Consider cash flow. You'll need to have enough capital on hand to cover any short-term losses due to vacancies between tenants or due to repairs that are needed to be made.

* Start small. Look into buying a single family home or even a small condo. Leave large apartment buildings and commercial properties until you feel comfortable with making a large purchase.

* Find a property that will be in demand. Look for a moderately priced home with three or four bedrooms, two bathrooms, and a garage that sits on a known street. The more demand there is for a property that greater the chance it will appreciate faster and be able to sell faster.

* Research the property. The most common way first-time investors lose is by failing to investigate a property thoroughly. Look beyond the front door. Investigate the reputation of the school district, the crime rate, and plans for expanding a nearby highway or developing plazas, malls, etc. Ask your REALTOR® about the area, its history, and how fast (or slow) properties are moving.

* Inspect the home you're considering for signs of water damage, such as stains on the ceiling or gathering wallpaper; open and close every door and window; and check all electrical sockets by plugging in an appliance. Get an independent home inspection, roof inspection and termite or infestation inspection. Unexpected repair costs can eat away resale profits. Because even the best inspection can't always predict problems, try to set aside some of the rental income for unexpected repairs.

* Spend time driving the streets of the neighbourhood noting the condition of other properties. Are lawns maintained? Are roofs in good shape? Are homes kept up? Neighbourhoods are almost as important as the property itself because if the house is in bad condition and the neighbourhood is in good condition with demand that almost surely your investment will payoff. And if it is the other way around where the neighbourhood is in bad condition with low demand and the home is in pristine shape it may be an unadvisable purchase

* Be ready to make fixes quickly and respond to the renter's needs. Have a list of specialists, such as plumbers, electricians, roofers, etc. If you're not prepared to be a hands-on landlord, consider hiring a property management firm. Your REALTOR® can help you find a specialized property management firm.

Remember, investing in a property is much different than living in one, and while emotion and attachment can be prime motivators when it comes to homes, it is return on investment and appreciation that counts when investing in real estate.

Contact Joey with any questions you have about real estate investments or properties that you are looking for.

Joey Khan, REALTOR®
RE/MAX REALTY SPECIALISTS INC., BROKERAGE
Office: (905)-858-3434 ext. 1186
Direct (Cell): (416)-918-2912