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7 Tips for Real Estate Investing

7 Tips for Real Estate Investing

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Thinking of investing in Real Estate? Meet Don Campbell. The name needs no introduction for Canadian real estate investors. Less well-known, however, are the seven investment rules the Real Estate Investment Network founder shared for a recent feature profile. Got a pen and paper?

1. Manage Your Expectations. The road to sustainable wealth is not a straight one. There will be economic curves to navigate, tenant potholes to avoid and financing road-blocks to get around. Investors need to face the reality of the business they are entering and use a system that helps them navigate through the inevitable twists and turns while at the same time keeps them moving forward.

2. Never sign anything that’s inaccurate. A supposed shortcut that some people justify while trying to navigate the real estate investing highway is to not be honest 100% of the time. Sadly many are coached to sign documents that are truly inaccurate.

3. Numbers tell the real story. Never fall in love with a piece of real estate no matter how nice it looks or feels. It is easy to talk yourself into just about any property. A strategic investor only falls in love with the numbers and cash flow. Those who fall in love with a specific piece of real estate will always over pay for the property.

4. Gain Perspective “Don’t drink your own Kool-aid.” Never blindly believe everything you hear. Sophisticated investors never allow themselves to think they know everything about their market. Find ways to keep expanding your knowledge and expertise by speaking with investors from all different backgrounds.

5. Buy for cash flow first – value increases second. There is no more important risk mitigation factor than positive cash flow. It allows you to ride the inevitable ups and downs of the real estate market and can provide will become the basis for long term sustainable wealth.

6. Treat your real estate like a business. Unlike other investment options, the minute you buy an investment piece of real estate you become a business owner and must start thinking like one. One of the biggest mistakes investors make is considering investment real estate a passive income investment. It is far from passive and you must manage the property as you would an active business.

7. Choose your advice wisely. Only ask for real estate investment advice from somebody who has extensive history and has seen all market conditions. Find a way to get your advice and analysis from someone who doesn’t directly profit from you purchasing a piece of property. And never, ever buy based on a “Hot Tip.”

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Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca 

Investing in New Construction

Investing in new construction can be rewarding and hurtful at the same time. Let’s examine some of the benefits and deterrents of buying that brand new home.

Benefits

Everything is new
If you like shiny things and clean corners, new construction cannot be beat

Prices can be promotional
Getting into a new development with early bird or promotional pricing can help you gain financial ground in the real estate market

Developer incentives
The Developer may offer incentives for buying one of their products, such as memberships to certain clubs or business’, additional appliances or upgrades, etc.

New technology
Your building will be made of the latest and greatest advancements in construction and design

Support staff with development
Onsite development staff will be constantly at the development for the first few weeks. This is the time to let them know of any problems, while they are easy to track down

New home warranty
The new home warranty covers all new homes built in British Columbia. You get 2 years on labour and materials (some limits apply), 5 years on the building envelope and 10 years on structure. It’s the strongest construction defect insurance in Canada.

Deterrents

High rentals
Most new developments these days have a very high rental rate due to changes in our fluctuating real estate market. Renters are associated with taking poor care of the property and having a lower level of respect for the occupants. Most new developments would have no restrictions on the amount of rentals

Unestablished strata
The strata council can change and implement changes altering bylaws manipulating your resale audience

Cost can be speculative
Buying a new property at tomorrows prices have burned many people in the last 10 years, disabling them to sell at a profit or even break even

Prices are non negotiable
Developers tend to avoid price haggling at all costs. The price is usually the price

Contracts written by the developer, for the developer
Any contract you sign from a sales office was written by a very educated and determined legal team to protect all aspects of the developers behind. These contracts are heavily weighted for the developers benefit only.

Floating completion and possession dates
Your move in date can be pushed back typically, not fully ensuring an exact move in date

HST
Got to love those taxes. Similar to buying a new car and driving it off the lot, 12% HST is difficult to recover short term

Immediate resale complications
Many developments do not want to compete to sell remaining properties if you choose to sell your unit in the early stages as well. If you have purchased and decided to move, there may be restrictions on how you are able to market your property, or you may even have to pay the developer a portion of your sales money as a penalty.

When purchasing a new home, it is critical to include the involvement of me, your REALTOR®. By reviewing the contract for unfair terms or conditions, providing you with a real time market value, proper pricing forecasting, and ensuring you do not overpay, you can avoid many of the deterrents listed above. Investing in a new development can be rewarding, if done correctly and well-researched.

Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca