Dive Into Canadian Real Estate: Your Ultimate Beginner’s Handbook
Among the swiftly evolving industries in Canada and across the globe, one stands out, growing with each passing moment—the Real Estate sector. Canada’s real estate market is expected to expand by 3.89% from 2024 to 2028, reaching a volume of US$9.54 trillion by 2028.
The real estate market is at its full potential and has no signs of stopping. People that had a landlord in the past or are still under one always dream of being one. Other than that investing in real estate can help you diversify your portfolio and if done right, can be added as a source of passive income.
Investors are under the false impression that entering the real estate industry is a hassle, it is easier than imagined. In this article, we will list some ways to invest in the real estate market and earn potential income.
1. Investing in Real Estate Investment Trusts (REITs)
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One of the ways to start your real estate investment journey is by investing in REITs.
- By investing in REITs, you can dwell in the real estate market without the physical real estate.
- REITs are similar to mutual funds.
- These Real Estate Investment Trusts offer high dividends to investors and are common for people strategizing their retirement plans.
- People that have invested in REITs can automate their dividends to grow their investment further if they don’t want a regular income from these dividends.
REITs are a common way to get into the real estate market but can be complex and varied.
- The risk you will bear is highly dependent on the type of REITs you invest in.
- People that are new investors can stay safe by trading public REITs that can be bought from a brokerage firm.
- For advanced investors that are diversifying their investment portfolio can invest in non-traded REITs but must understand the risk tolerance as these non-traded REITs are hard to value and sell.
The initial step to take to dive into this investment is opening a brokerage account.
It is easy to open a brokerage account as it requires no initial investment and opens in under 15 minutes.
2. Opting For an Online Real Estate Investing Platform.
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An online real estate investing platform can help an investor connect with a real-estate developer.
- This in turn gives the investor debt or equity to finance a project of the developer.
- The investor finances the project and receives a quarterly or monthly amount as he bears a high risk and has to give a fee to the platform.
- Like all the other real estate investment prospects, these platforms are highly illiquid and speculative and are harder to trade than a stock.
It falls under the category of expensive investments as the Securities and Exchange Commission specifies that people with a net worth of $1 million or more and people with more than $200,000 income in the last two years can invest in these platforms.
3. Renting Properties Fall Under The Real Estate Industry.
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It is probably one of the most underrated business prospects in the real estate industry.
- Renting out property(s) is one of the most effective real estate markets that might earn you a steady yearly income.
Julian, a university student, found a four-bedroom set up in a student-housing style off Craigslist.
- She used one room and rented the other three.
- All of the expenses she encountered were paid by these rented rooms, and she earned an extra $100 in cash.
- You can also rent out an entire property and find yourself a place where your expenses are less than the amount you earn through the rented property.
However, if you do not want to indulge in any mishappening or renovations of your rental property you must hire a property manager to care of any matters regarding your property so you don’t face any difficulties.
4. Flip Investment Properties.
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Another business prospect in the real estate industry is the house flipping business.
- You buy a property needing renovation; you renovate the property, fix all problems of that property and resell it for a profit.
- However, you must know it is more expensive nowadays to renovate a property as materials are getting costlier due to inflation, and mortgage interest rates are soaring higher than ever.
- This strategy of flipping properties is a bit harder than expected.
A firm grasp of financial management and adeptness in calculations are essential attributes. This is particularly true given the potential scenario of slim profit margins or even break-even points with your initial investment when dealing with flipped properties.
Additionally, be prepared to navigate the risk of carrying a mortgage on the property if it remains unsold for an extended period.
Conclusion
The real estate industry stands out as one of the select few sectors offering greater opportunities for success than failure. Through diligent research and meticulous planning, your aspiration to invest in this field can transform into reality. Surprisingly, entering this industry is also less challenging than one might expect.
