Investor's Corner

Being a home owner gives each of us a great feeling about ourselves and our finances, and most importantly, our future.

Nowadays more and more people are thinking about real estate investments and about making an additional income before and after their retirement. A few lucky ones may have the luxury of working in the same company for over thirty years and retire with a generous retirement package.

So, you are in your thirties or forties and most probably own a property where you live.

Why own more real estate?

First of all, it is a tangible asset; it’s going to stay there through market ups and downs unless one panics and sells when the market conditions slow down. Those who have tasted the volatility of the stock market in 2008-2009, will agree that diversifying your financial portfolio is a creative and safer way to build wealth and stable income. Moreover, steady value appreciation {may vary each year based on the type of property, location, etc.} puts your investment ahead of inflation and stock market uncertainty.

So the question is: how to start and what exactly to buy?

There are a few factors to consider when thinking of investing in real estate:

1. Your financial portfolio
2. Your mental and emotional readiness
3. Your lifestyle and family
4. Your commitment and involvement in managing your investment; your skills and comfort level
5. Your expectations versus reality
6. Your trusted realtor and team of professionals to guide you through the process before, during, and after the acquisition of a property

Now let’s take a quick look at the different types of investment properties that GTA offers. It is important to know your options and most importantly be at your comfort level when thinking of investing.

Residential Freehold – Most common type of investment, whether for your own enjoyment or for rental; suitable for first time investors, includes houses of various types such as detached, semi-detached, and freehold townhomes. People are comfortable buying freehold houses as income properties since they require residential financing and at some point may be used for own family needs. Freehold homes usually appreciate relatively faster depending on the area and market conditions. However, they might require more landlord involvement such as maintenance with the property if tenanted. Bear in mind that tenant insurance is advised for safety and liability. As well, caution should be exercised when renting out non-conforming, otherwise non-legal apartments that do not meet the safety requirements imposed by the Fire Marshall. Another factor to consider is the tenant’s rights and responsibilities versus the landlord’s.

The Residential Tenancy Act must be your reference source to keep your tenants happy and build good rapport with them for long term and mutually beneficial relationship.

Condominiums – Widely popular in Toronto in the recent years since the big real estate boom. More affordable, require less capital investment and less ongoing maintenance. Statistics shows that there is a growing demand in mid-rise and low-rise condominium projects as they offer bigger suites with functional layouts bearing in mind the needs of small families. Prices in these types of buildings tend to grow at a stable rate as there is smaller turnover, making these properties great investments.

However, caution must be exercised since the appreciation and value partially depend on the building management: the higher the maintenance fees per square foot the harder it is to sell. Through daily experience we get to find out valuable information from word of mouth that may not be necessarily disclosed in any condominium papers. For example, some buildings may be “blacklisted’’ in lenders’ records because of diminishing reserve funds or risky expenditures that are planned to take place in the nearest future.

This is where we help our clients to invest in well managed buildings by doing our due diligence and lowering the risk for the purchaser.

Condominium apartments can be a great investment if approached correctly with a specific purpose in mind.

This website offers a wide variety of condos for rent and for sale in Don Mills area, ParkwoodsDonalda, Graydon Hall, Agincourt, and Don Valley Village.

Also check out Liberty Village condos for sale and Don Mills condos.

In my next post in June we will talk about other investment options such as commercial, multi-use, mixed, etc.