Investing in Real Estate is becoming an increasingly popular way to build wealth that people of all ages and stages of life are looking to take advantage of. Not only does an investment in Real Estate appreciate in value, but it also helps to build equity, to receive a predictable cash flow, and to develop the financial freedom to enjoy life to the fullest. Fortunately, there is a multitude of ways to take advantage of the fruit that these investments bear, but the proper steps and planning must be taken into account before diving in headfirst.
First and foremost, it is important to understand what you are looking to get out of your investment, and what you can offer towards it; While some may have more time to learn and be an active participant, others may lack this luxury but have a higher capital to work with. No matter what your situation may be, there are many different ways that you can invest your time and money into your future. To get you started, here are a few great strategies that many people are now using to build their wealth with Real Estate.
Income Property: Buy and Hold
One of the most common ways people invest in Real Estate is by purchasing a property and renting it out to tenants. This is a fairly simple concept where the goal is long-term passive cash flow. The positive side of this tactic is that you can borrow from private lenders to finance the deal. However, you do need to take the time to learn what properties to invest in, what to look out for, and make sure to work out the math to ensure you are investing in a property that will be profitable. As a general rule, it is ideal to invest in multi-unit buildings rather than single-family homes. This way you can generate the most income for the smallest capital, which also comes with less cost per tenant than multiple single-family homes. Nonetheless, this will ultimately depend on the market and whatever your long-term goals may be.
Investment Property: Buy, Flip, and Sell.
Many people refer to this tactic as “flipping”; This is where you buy an underperforming property, or one that requires some repairs and completes the necessary improvements to increase the value of the home. Ensure to work with a Real Estate professional and an appraiser to help confirm that your After-Repair Value (ARV) is realistic to comparable properties in the market. Similar to income properties, you will need to take the time to learn how to do this successfully; With house flipping, investors generally sell the property after the renovations are complete to yield a profit that they use to continue investing in income properties.
When investors become more comfortable working with their Real Estate investments they may even begin to use a combination of these strategies: One might purchase a multi-unit property using private money and make the necessary improvements, but instead of selling, they may choose to lease it out to tenants to generate higher cash flow; Others may refinance the property to roll their renovation budget into the mortgage and pay off private loans. The route you take to build your wealth with Real Estate can be a dynamic, ever-changing and growing process.
Let’s Talk Investments
With the many lending options available these days, and with stability that the Ottawa market provides, making an income off of property has never been more attainable. As a long-standing REALTOR ® in Ottawa, my mission is to develop relationships with my clients to fully understand the scope of their wants, needs, and goals and get them started on their path to financial freedom. For any questions or concerns about how you can invest in Real Estate, please feel free to reach out to me anytime.