Investing in real estate … yes, I’ll say it one more time … it’s the biggest investment you’ll ever make. Now that everyone has faced that many times, let’s see where the process can begin.
1) What type of investment do you want to make? I can help you decide … If you are not looking for work, no risk and little return, stop reading and dive into the RRSPs. If you are looking for little work, little risk and good returns, then a residential property is for you. Newer, close to the things that tenants love. If you are looking for a lot of work, a lot of risk and a great return, your thing is to turn around. There are also commercial deals, such as land and office buildings, but these are often too expensive and complex for most new investors.
2) Do you need money? Let’s look at places where you can get money to invest. Look closely and then turn further away from you. So first it’s a LOC. Credit line. This can be removed from your home if you have equity. Maybe savings? Now let’s spiral out. Family and friends. See if you want to buy a house with friends or family. Don’t let people tell you, NEVER do business with family and friends. They are a great resource and it can be a win-win situation for everyone. Next would be investors. Find others who are looking to invest. Now be very careful. There are many companies that say they will take 10,000 from you and invest it. That’s not what I mean. Find some people with cash who want to buy a property like you. Keep the money close and the house to all your names. Beware of scams.
How much do you need? In Calgary, Alberta, and the rest of Canada, you need a 20% investment property. But if you don’t mind moving, you can do a primary upgrade. You can only do this once. But you can keep your house and move to something more expensive with a 5% down payment! So you can have an income property for little money.
3) Build your team. Get a mortgage broker. They will give you the loan you need. Tell them that you would like to establish a relationship with the lender. This is key for subsequent transactions. Now you NEED a Realtor®. Even before I was a Realtor®, I knew the importance of one. Please note that I am not referring to ANY Realtor®. I’m talking about an experienced Income Property Realtor®. One who knows the numbers, renters, owners, homes, statistics, and the ins and outs of real estate investing. The Realtor® will save you time, money and make the process easier than you think. A real estate attorney, real estate accountant, and home inspector should complete the kit.
4) Now find the house … read my next article on what you should be looking for.