INVESTING: WHAT TO KNOW
Investment Profile:
Investment analysis of a property is an ever-changing process. Whether it is a principal residence, secondary dwellings, small commercial or buildings four (4) units and under, we have expertise and ability to judge value.
There are many reasons to invest in real estate:
Appreciation: Property values tend to increase in the long run, especially in markets in Ontario.
Cash Flow: Rental properties can generate consistent monthly income, if managed well.
Leverage: You can use financing to purchase an asset worth more than your initial down payment.
Tax Benefits: Investors can deduct mortgage, interest, property taxes, insurance, and other expenses. (best to consult with your accountant for this information)
Tangible Asset: Unlike typical cash investments, real estate is a physical asset that you have a larger control over.
Making investment decisions isn’t just looking at the comparables. It is evaluating the market climate, trends and individual property assets and deficiencies that go into assessing is it priced too low or too high, is it a good investment? — and how to approach the representing agent, handling an offer & the pricing.
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Depending on your goals, there are different types of rental investments:
1. Buy-and-hold rental properties
a. This is buying a property that you will rent out for ongoing cashflow and to get the benefits of long-term appreciation of the property. This is the most common type of investment for first timers.
b. The Landlord and Tenant legislation is an important component of research for your thoughts on future investment opportunities. We can help guide you through some of the rules and regulations to keep in mind when becoming a landlord.
2. Flipping
You’ve seen all the tv shows, buy a lower-priced fixer-upper property that you can renovate and sell for a profit. This type of investment is higher risk but can results in higher rewards and can be relatively short depending on the work being completed, and the market at the time you list.
3. House “Hacking”
This is when you buy a multi-residential property and plan to live in one unit and rent out the rest to help offset your mortgage. You’ll also see these referred to as “mortgage helpers” in listing descriptions.
4. Pre-Construction Purchases
These are early investments in a new development, you purchase and hold until the building project is complete. This is gaining popularity as new builds begin popping up in the area.
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So where do you begin? First time investors may feel overwhelmed with the number of choices and different ways they can go about investing in real estate.
Start with the numbers.
This is where you focus on cash flow, expenses, and potential return on investment.
Make sure you know the rules.
Landlord-tenant laws can be tricky and strict, and getting matters resolved by the Landlord Tenant Board takes considerable time. It’s important to understand the Residential Tenancies Act and how rent control works in Ontario before you become a landlord.
Get pre-approved.
Just like buying a home to live in, it’s especially important to get pre-approved when investing. Financing rules for investment properties are different than regular residential. Make sure to talk to a mortgage broker early. We have many trusted mortgage brokers you can work with. Visit our trusted vendors page for more information.
Work with a realtor who knows investment properties.
We’re here to help from zoning and rental potential to future value and tenant screening, knowledge is the key to investing, and that’s what we’re here for.
Plan for the unexpected.
Like your own home you need to consider maintenance and emergency funds. Investment properties can involve other unexpected costs like extended vacancies and rising interest rates.
Investing in a second property is a big decision, and the right move depends on your goals, timeline and risk tolerance. A long-term hold can offer strong returns, but investing is never one-size-fits-all. That’s why working with someone who truly understand the market is irreplaceable. With over 18 years of experience, we bring insight to neighbourhood trends, zoning considerations, and potential future development – things that you can’t just ask ChatGPT or Google. This knowledge can make or break an investment decision.
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