The real estate market is popular in major global cities and so most investors look for great areas to diversify their property portfolios. If you’re planning to invest in real estate business, you need to consider some essential factors which may include like security, population and affordability.
According to the 2019 Global Liveability Index, Toronto was ranked seventh in the list of most competitive and livable cities in the world. The index also scores high in terms of stability, education, culture, and infrastructure. It’s a great place for investments with fast growth and high demand for rental inventory. Hence, you may find your next address in owntheaddress.com for better business opportunities.
However, investing in real estate is challenging and isn’t as easy as it may look. Without proper planning and investment strategies, you’ll be facing a lot of risks. Still, most investors opt to invest in real estate because of the beneficial reasons, aside from paycheck.
So, before diving into the realm of investment property in Toronto, consider the following tips to maximize your venture:
- Set Goals
The investment property must provide you with concrete returns, plain and simple. There must be an aim for every property in your portfolio. When the investment property isn’t working well, analyze the cause of performance. For instance, evaluate if the house needs renovations to compete with the market, or maybe you lack the homework and that keeps you stuck with bad tenants. It’s important to set achievable goals to guide you and take corrective actions in case of challenges.
- Understand the Local Market
Understanding the real estate market, makes a buyer or a seller empowered in decision-making. There are some factors that affect the market and pose relevant impacts on the buyer or seller.
- Supply and Demand: The supply of homes for sale is relative to the demand to buy them and this ratio determines whether the market favors sellers or buyers. When there’s plenty of homes for sale, but only a few who wants to buy them, then, it’s an opportunity to be a buyer. This is referred to as a buyer’s market. Eventually, buying in a buyer’s market will be an advantage because you may get a low price.
However, when there are limited homes for sale, but many wanted to buy them, then being a seller would be great. This condition is called a seller’s market. Selling at a seller’s price will give you several offers more than you’re asking for. Conversely, buying in a seller’s market or selling in a buyer’s market will result in opposite effects.
- Mortgage Rates: Low mortgage rates tend to increase the demand to purchase homes. When rates are financing, investing can be expensive, while when rates are dropping, financing becomes cheaper and more people will buy a home.
- Economy: Economic factors like job creation, employment, household formation, and wage growth can affect the demand for buying properties. A strong economy can be a triggering factor for a strong local real estate investment with healthy demand and rising prices.
- Adding Some Modifications
Once you’ve decided to purchase the property in a prosperous area, don’t just sit and wait for capital gains. Instead work it out and cultivate the property to build up profits. Of course, it’s imperative to provide a welcoming and fully-functioning place to your tenants but consider practicality in home upgrades.
Canadian homeowners choose to renovate and spend $11,800 on average on ‘wear and tear’ repairs and basic maintenance like flooring, painting, and refurnishing. The market for Canadian home renovations is more popular than the market for new homes. Here are some of the most effective and popular renovation areas:
- Additional extra bedroom or bathroom
- A fresh coat of paint
- Kitchen upgrade
- Enhancing the curb appeal
- Creating an exterior entertaining area
Some of the renovations are quite expensive but the refurbishments can add a lot more value to your property.
However, it’s important to keep things simple. Don’t make it too fancy, rather be practical on the choice of materials that’s durable, functional, and provides aesthetic value as well. Don’t be too cheap and consider the quality in the long run.
- Hiring a Property Manager
Another way to improve your profitability in real estate is by hiring a property manager. The manager can advertise and select the potential tenants, collect bond and rent payments, organize essential things for your home, do the inspections and deal with required maintenance. Choosing a manager that works in a real estate agency is also an advantage since they can offer better insights about the market in your area.
Here are some qualities of property manager , to facilitate in the process:
- Great with People at the Right Times: A great manager knows the needs of the tenants as they’ve the ability to profile and screen tenants. Also, they’ll tell you about areas of property that need improvements, considering your budget.
For instance, if the tenants are millennials, the property manager will tend to choose modern finishes and nice paint coating, to suit the ambiance and comfortability of tenants.
- Great Service: A great manager is the one who’s responsive to your emails and calls, and diligent on backing up their services when on vacation. It’s important to know the back-up’s name and their commitment to respond to your contract agreement.
- Creative Marketing: It’s better to hire someone who can demonstrate proactive marketing strategies and know how to sell the property during showings. Usually, they go beyond the old boring ads and definitely sell your place among the target tenants through the latest social marketing tools. You can ask for their portfolio and other marketing tools when selecting the best ones for you.
- Diligent with Numbers: Of course, you’ll want a property manager that provides you with monthly statements and scanned receipts in an organized manner. During the interviews, ask for their system in reporting to clients and see how it looks like. Of course, an annual report with no details on repairs isn’t a good quality of the applicant.
- Handyman: It’s advantageous to have a property manager who can do quick fixes as well like minor paint jobs, leaking faucets, and other minor repairs. However, if they lack this quality; the other option is they should know a repair team that can do the work. The connections and great rapport with the manager to the team will be resourceful with unavoidable situations of home maintenance. Regular maintenance is critical to keep your properties in tuned with functionality. The maintenance will prevent huge problems that may lead to costly repairs. For HVAC unit replacements, an experienced handyman knows that PTAC4Less is a great resource to consider.
- Understanding of The Real Estate Trends
Maximize the benefits you can obtain from your real estate investments by continuously equipping yourself with the right knowledge and skills. Be determined to always find out the trends in property management, the finance aspect of your business, and even people management.
The previous year was a challenging time for everyone, but the new year brings hope for a brighter future, including the real estate industry. Investors must be prepared to embrace the new normal by learning the best technologies that can set themselves above their competitors.
Check the following trends in the real estate industry today:
- AI-Assisted Pricing: Real estate investors and brokers usually rely on property features and neighborhood and community factors when making real estate price estimations. However, with emerging technologies such as precise mathematical modeling and artificial intelligence (AI), estimating prices are more accurate than before.
- Use Of Smart Devices: When it comes to property management, real estate investors can take advantage of the Internet of Things (IoT). IoT includes the latest digital innovations, such as smart speakers (like Amazon Alexa and Google Home) and smart sensors (don’t require human intervention to transmit data). Smart devices provide great opportunities for landlords and tenants, transforming the property management landscape.
- Targeted Ads: Ad tech changes traditional home search because real estate investors have a higher level of ad management know-how, using different digital tools to target perfect clients for new on-the-market properties.
- Virtual Tours: Because of the limitations brought about by strict enforcement of safety protocols during the pandemic, virtual tours are gaining rapid popularity. These virtual tours now utilize a higher level of design to enhance the experience of potential clients. With the addition of augmented and virtual reality, virtual tours are more interactive now more than ever.
Having a great property manager will save your time, energy, and eventually value and cost. Hence, it’s best to invest in investable and valuable assets.
Before diving into the realm of real estate, consider the above-mentioned tips, to help you make an informed decision. A good set of goals, research and local market analysis, updated renovations, and hiring a property manager can be useful to help you maximize the investment venture.
Samuel Wallace published articles on real estate online. Samuel aims to help his readers make the right decision in selling and buying their homes. Samuel also provides tips on how individuals can find the best real estate agent and how they can make the most out of their real estate investment.