Toronto Real Estate Investing: Succeed by Breaking Out of the Wrong Mindsets
Real estate investment in Toronto is actually much simpler than people think, but you have to have the right mindset to do it. That mindset is somewhere in the middle between being too scared to jump into it before investigating every small detail and being overconfident and uninformed. As with everything in life, moderation between the two extremes is where you want to be in order to be successful with real estate.
The most successful investors we meet are confident, make decisions and don’t look back. They are not looking for a silver bullet to make easy money. But they are patient and willing to look down the road long-term. They believe in themselves and they believe in the real estate market.
Stop being scared of the “what-ifs” of property investment
You may have a dream of investing in an income property. But somehow, you always manage to talk yourself out of it. Prices are too high, the market isn’t right, you don’t have enough time – there’s always an excuse.
If anyone actually knew how the real estate market would perform, they would be the richest people in the world. There is one fact that every statistic backs up – real estate always appreciates in value in the long term. The hardest thing is to purchase that initial property and it’s like quitting smoking – the sooner you do it, the more results you’ll see over time. You have to hold your nose and take that initial risk, but you shouldn’t do it flying blind either. A Toronto property investment firm like Highgate can walk you through the entire process, from making the initial purchase to managing the property for you.
For the overconfident: Real estate investment is not a way to get rich quick
There are a few types of people who fit into the “overconfident” category of real estate investor. Either they’ve been to a few real estate investment “seminars” where they’ve been asked to fork over thousands of dollars to learn something a Realtor could tell you for free, or they’ve been watching reality TV shows where houses are flipped and fortunes are made. Either way, the overconfident real estate investor comes in with guns blazing and a little bit of uncontextualized knowledge.
The #1 thing that you should learn about real estate before you purchase an investment property is that there is no “Get Rich Quick” scheme that can possibly involve real estate. Even if you purchased a dirt cheap foreclosed property in the US after the American mortgage crisis of 2008, you would have still had to hold on to that property for a number of years to make good money on it – and that’s an extreme example that hopefully, for the economy’s sake, won’t happen again. Real estate investment is exactly that – an investment. It’s an investment of money and time. It does pay off – but only over the long term, and only if you manage your cash flow properly and make prudent initial buying decisions.
For the house-flipping bunch, the thing you don’t usually see on those shows are the hidden costs that crop up after the sale and the renovations start. There may be structural issues that were missed on the home inspection, requirements to bring the property up to code, and more – all of which can quickly nuke any profits that could have been made on the sale. Due to this and many other factors, house flipping is also not a “Get Rich Quick” scheme, unless you make prudent purchase decisions and budget properly.
Real estate investing done right for everyone
If you want to do real estate investment right, just follow these three simple steps.
Step 1 – Contact a real estate broker
Find a real estate broker you can trust – preferably one like Highgate which also does property management. Firms like this will know the rental market and the real estate market, and can educate you on both.
Step 2 – Get in touch with the market
You can read all of the books and real estate magazines that you want – the only way to really get to know properties is to go see properties with an experienced broker, even if you aren’t planning on buying one yet. Pick an area that you and your broker like, then go see about ten properties in that area. Find out what each property sells for. This will tell you how much you need to budget for, give you an idea of fair market value for the area, and start your real estate education. Don’t be worried about being viewed as a tire kicker, you will likely be buying a property with that broker one day and a good one won’t mind showing you the ropes. Repeat the process every couple of months until you have a good sense of what properties sell for, what potential issues are, and so on.
Step 3 – Purchase your investment property
If you’re already working with an experienced broker, they’ll have helped you work out what your budget should be for your investment property. Most importantly, don’t over leverage yourself in order to purchase an income property – even the best-laid plans come with unforeseen costs that you should be prepared for.
Now that you have a sense of the market, you can apply that knowledge and put in offers that are likely to be accepted on properties where you see the most potential growth, the best rental possibilities, and so on.
Step 4 – Properly manage your investment property
If your intention is to rent your property out, you’ll get the most return on investment with a property management company – especially if you are not an experienced landlord. They will help you avoid potential pitfalls like non-paying renters and more. A firm like Highgate can also help you out if you are interested in house flipping – we know the duds and the stars, and have contractors on hand who are affordable and efficient. We’ll also make sure you aren’t overleveraging yourself financially and have enough funds to do it right.
If you are interested in real estate investment, contact Highgate today. We don’t speak at fancy seminars, but you can get our advice for free – and our family has been in the real estate and property management business for decades.