Investing in real estate can be a great way to increase your monthly cashflow or round out your robust investment portfolio for the future. Deciding which investment route is best for you weighs on some important factors;
- How much money do you have to invest, where are the funds coming from?
- What is your desired net return on investment? (ROI)
- Where would you like to invest? Consider areas that respect your budget, have low rental vacancy rates and offer popular amenities for potential renters.
- How involved would you like to be in your rental property? Will your investment require a property management company’s services and support?
- What is your personal risk tolerance? What are your short-term and long-term goals while owning a property?
With your budget set and some top locations pin-pinpointed, it’s time to start considering your investment prospects – here are the top 3 real estate investing opportunities for 2020 that may suit your individual investing dreams;
Purchasing a Rental Property; Rental properties are a popular way to create a steady stream of income; with well-vetted tenants and a properly maintained property you could secure ongoing income as a landlord for many years. Prior to reviewing potential rental properties, ensure you’ve met with your trusted mortgage professional to establish your budget, mortgage terms and investment goals. Before making an offer on a property, work with your Realtor® to gather property tax costs, utility consumption figures and other ownership obligation details. With your mortgage pre-approval details in hand, and the property’s individual ownership obligations determined, you can use a rental income calculator to conclude whether a property will cashflow or create a monthly deficit when rented.
Renovating to Sell; With interior design platforms such as Pinterest and Houzz inspiring the internet, it’s easier than ever to plan a renovation and even obtain step-by-step tutorials to take your renovation vision to fruition. Though the prospect of polishing an outdated property for resale may be the most exciting idea you’ve had this decade, it’s imperative you consider the pros and cons of this avenue. Before you set out on a buy-and-flip investment, talk to your professionals; realtor, lawyer/notary and accountant about potential regulations or tax and gain implications you may fall subject to from selling. Remember to avoid costly future issues by hiring insured trades companies and established professionals to complete renovation work that is outside of your skill scope.
Rental Suite Within Existing Real Estate; The December 2019 OMREB Real Estate Report showed an average residential property sale price of $509,630; which may make purchasing an additional property for rental purposes out-of-reach. If investing in an independent rental property isn’t yet an option, you may consider creating rental opportunity within your existing principal residence. Investing in your current property to capture rental income is a great way to leverage what you’ve already got; it serves as an asset both while you own and generate income and serves as a feature to potential buyers if the time comes that you sell the dwelling. Set your budget and mandatory work for the renovation, allotting some time and funds in the projection for any surprises. Determine whether you’ll hire a residential contractor to complete the work and if you’ll tackle any renovation aspects on your own to reduce overall costs.
Whether you’re purchasing real estate for personal or investment use, the process will require some key steps;
- establish your investment property criteria needs and target areas
- build your team of real estate professionals; Mortgage Lender, Residential Lawyer or Notary and Realtor®
- complete a pre-approval qualification with your trusted mortgage professional
For individual investment questions or to determine if 2020 is your year for investing in real estate, do not hesitate to call Craig Shantz today; 250-833-6121.