Real estate is one of the most popular and profitable forms of investing in Canada. The Canadian real estate market has been resilient despite the challenges posed by the COVID-19 pandemic, low oil prices, and rising interest rates. However, not all real estate investments are equal. Depending on your goals, risk tolerance, and budget, you may want to adopt different strategies to maximize your returns and minimize your risks. To help you understand the ins and outs of real estate investment strategies, we talked to an expert in the real estate market – Angela Qarizadha.
| The Residential Real Estate market is expected to attain a value of US$6.25 trillion (CAD$8.36 trillion) by the year 2024. |
About Angela
Angela Qarizadha is a highly experienced professional with an impressive career in the real estate market. With more than two decades of experience, she has made significant contributions to the residential, commercial and industrial sectors. As a real estate broker, her buying and selling skills have led to the successful sale of over $50 million worth of real estate.
Moving from broker to investor, Angela’s complete and deep understanding of the market enables her to achieve exceptional results, while her commitment to clients backs up her promise of 100% customer satisfaction.
Buy and Hold
The buy-and-hold strategy is one of the simplest and most frequent ways to invest in real estate. It involves purchasing a property and holding it for a long period of time, usually several years or decades, while collecting rental income and benefiting from capital appreciation. The buy-and-hold strategy is suitable for investors who have a long-term horizon and are looking for passive income and wealth creation.
To succeed with the buy-and-hold strategy, you need to do your research and due diligence, choose the right property type and location, and manage your property and tenants effectively. You can also leverage your investment and benefit from compounding by using a mortgage. You can also protect yourself from inflation and market fluctuations by investing in a tangible asset that tends to appreciate in value over time.
Fix and Flip
The fix and flip strategy is another popular way to invest in real estate. It involves buying a property that is in need of repair and renovation, fixing it up, and selling it for a profit in a short period of time, usually within a year or less. The fix and flip strategy is suitable for investors who have a short-term horizon and are looking for capital gains.
For a profitable fix and flip strategy, you need to find a good deal and negotiate well, plan your budget and timeline carefully, and hire a professional team and oversee the work. You can use online platforms, such as Zolo, to find potential deals. You can also network with real estate agents, wholesalers, auctioneers, and other investors to get access to off-market properties. You can also be creative and add value to the property by transforming a rundown property into a desirable one.
REITs
REITs, or real estate investment trusts, are companies that own and operate income-producing real estate properties, such as apartments, offices, malls, hotels, and warehouses. REITs allow investors to buy shares of these companies and receive dividends from the rental income and capital gains generated by the properties. REITs are a convenient and accessible way to invest in real estate without having to buy, manage, or sell properties directly. REITs are also diversified across different property types and locations, reducing the risk of exposure to a single market or sector.
Crowdfunding
Crowdfunding is a relatively new way to invest in real estate. It involves pooling funds from several investors to fund a real estate project or deal, usually through an online platform or marketplace. Crowdfunding allows investors to access real estate opportunities that are otherwise inaccessible or unaffordable, such as development projects, commercial properties, or luxury homes. Crowdfunding additionally provides investors with the opportunity to diversify their portfolios and choose projects that match their risk and return preferences.
To succeed with crowdfunding, choose the right crowdfunding platform and type, research the project and the sponsor, and understand the risks and rewards. You can also invest in different types of crowdfunding investments, such as equity, debt, or hybrid, depending on the nature and structure of the project.
Wholesaling
Wholesaling is a form of real estate investing that involves finding and contracting undervalued properties and then selling them to other investors for a profit. Wholesalers do not buy or own the properties themselves but rather act as intermediaries or middlemen between the sellers and the buyers. Wholesalers make money by charging a fee or a markup on the properties they sell, which is usually a percentage of the purchase price or a fixed amount.
BRRRR
BRRRR stands for buy, rehab, rent, refinance, and repeat. It is a strategy that involves buying a property that is in need of renovation or improvement, fixing it up, renting it out, refinancing it to pull out the equity, and repeating the process with another property. BRRRR is a way to build a portfolio of rental properties and generate cash flow and appreciation over time. BRRRR also allows investors to recycle their capital and leverage their investment, as they can use the same money to buy multiple properties.
To be successful with BRRRR, you need to find properties that can be bought below market value, renovated within budget, rented at a high rate, and refinanced at a favorable term. You also need to plan your budget and timeline, hire a professional team, and manage your cash flow and debt. You can also benefit from the tax advantages and compounding effects of BRRRR.
Conclusion
Real estate investing is a great way to diversify your portfolio and achieve your financial goals. However, it requires a well-informed and strategic approach. By understanding the different real estate investment strategies in Canada and how to implement them successfully, you can make the most of the opportunities and challenges in the Canadian real estate market. No matter whether you choose to buy and hold, fix and flip, or invest in REITs, crowdfund, wholesale, or BRRRR, you can find a strategy that suits your needs and preferences.
The key is to do your research, analyze the market, and take action. Happy investing!
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