Investing - How To Start Investing in Real Estate

Written By Melissa Vass Scott
 

Are you wanting to start investing in real estate? More people have become increasingly dissatisfied with the typical 9 to 5 corporate job along with the rising cost of living have caused people to seek out financial freedom through some sort of investment or side hustle more now than ever. Investing in real estate comes with many benefits like increasing your wealth and the real probability of financial freedom but some people find it incredibly daunting. Follow these steps to get started!

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DETERMINE YOUR GOALS

The first step is always to determine your goals, don’t jump in blindly to the ring of investing.  An investor should always outline what they want out of their investment as that will lead them to the next steps. Set specific goals not general ones, follow the S.M.A.R.T. strategy: SPECIFIC • MEASURABLE • ACHIEVABLE • RELEVANT • TIME-BASED

This will guide you to the understanding of what you want out of real estate and how you can make that happen.  Instead of “I hope to buy an investment property” using the S.M.A.R.T. strategy “I will buy an investment property within the first year, aim for positive cash flow of at least $750.00 a month”. This is specific, measurable, attainable, relevant and timed.  It gives you a clear direction of what to look for in purchasing.

SPEAK WITH A SEASONED INVESTOR

If you have little knowledge of the topic of investing so jumping in can be difficult.  I recommend speaking with investors, join Real Estate meet up groups, speak with experienced investors to learn more about the realities of investing and ask for any advice they are willing to offer.

Someone with years of experience will likely have an abundance of knowledge.  It is an incredible community and I have found over the years that seasoned investors are more than willing to share their wealth of experiences.  Any advice on the processes throughout investing from purchasing your initial investment to expanding your portfolio.  A seasoned investor has lived through all of these experiences and has undergone many trials and tribulations!

 
 
 
Staircase to Real Estate Investing, step by step

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BECOME FAMILIAR WITH THE MARKET

A target market means the demographic that an investor hopes to attract to their rental properties land have them as tenants.  This is an important factor in determining what you initially want to purchase.

For example, if you want to appeal to working professionals you will need to have an understanding of that demographic in order to know HOW to appeal to them.  A working professional typically will work long hours in a city or urban setting with plentiful jobs. They may be single, a recent grad and not have children, therefore they might lean towards a small condo or apartment in the city centre within walking distance to restaurants and bars.  Close to public transportation or a go train. The units proximity to offices and amenities could attract many working professionals that don’t require a lot of space. 

You can conclude what a property and location require to attract your preferred demographic by simply evaluation their needs and lifestyle.

FIND THE RIGHT LOCATION

Before you start searching for the actual properties a potential investor should determine what location that they would like to invest in.  While cities like Toronto and Vancouver are growing hubs of real estate there are many other potential cities throughout Canada that have great possibilities for success.  I encourage you to explore these options before settling on a popular location or one that is close to you in proximity.

Complete a market analysis when considering different locations. A MARKET ANALYSIS should include an assessment of details such as: economy, employment, educational and environmental conditions of the area to determine whether your investment will thrive or be vulnerable. 

For example, properties in a location with population, employment and economic growth will likely increase in appreciation much more than areas that don’t.  Knowing this could protect your investment going into the future.

 
Doorway to your first Investment Property

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FIND THE RIGHT PROPERTY

After determining your target audience and narrowing down the desired location of your investment property, it is time to find the investment property to purchase. This can be stressful for a beginner but it doesn’t have to be. 

First and most importantly find a property that has appreciation potential.  If you want to understand real estate terms please refer to my blog post on Basic Real Estate Terms to fully know what this means because APPRECIATION is on e of the most important factors in ensuring that your investment is a success.  ALWAYS look for a property that will likely INCREASE (APPRECIATE) IN VALUE over time.  This could be a cheap apartment in an up and coming (gentrification) neighbourhood or a large condo in downtown Toronto.

A property that needs minor repairs/renovations or a few cosmetic changes has great potential for increasing it’s appreciation value. Don’t let the cost of a few changes deter you from investing as well. 

DETERMINE AND SORT OUT YOUR FINANCES

Little do people know that they are sitting on a pile of cash in their primary residence which can make investing easier. If you are concerned you don’t have enough money available talk to a Mortgage Broker, especially one that focuses on investment properties.  Quite often Home equity, which is the difference between the value of your home and how much you owe on your mortgage, can be taken out as a home equity loan and used towards an investment property.  

Up to 80% of your home equity can be borrowed at rates as low as 1.5% (depending on current interest rates) allowing you to invest in real estate easier.  A home equity loan is also tax-deductible, meaning that it can reduce your income tax.  Overall, home equity is a great way to use your assets to expand your real estate portfolio

WORK WITH A PROFESSIONAL

Don’t attempt to do this alone!  Rather than solely relying on yourself, seek expert advise from industry professionals:  Realtors specializing in Rental Properties or Airbnb’s, Commercial Realtor, Mortgage Broker, Real Estate Lawyer etc.  

Melissa Vass Scott

Who Am I

Writing about myself has always been difficult, that being said, it’s important you know a little bit about me because when working with a realtor we can end up spending a lot of time together! My goal, helping you build wealth through real estate!

Why did I become a real estate professional?

I have been in love with homes and architecture for as long as I can remember. The ability to share in someone’s home purchase or first investment property and guide them through the process is why I became a realtor, it’s truly the most rewarding experience!

How long have I been selling real estate?

If you include all the years I personally bought, flipped and owned rentals (both residential short-term, long term and

commercial), then you could say I’ve been selling real estate my whole life. But it became a passion since 2005 after I read my first real estate investment book; “Rich Dad Poor Dad”

Where do I live?

Right now, I live in Hamilton, but I’ve lived all over South Western Ontario; including Waterloo, Kitchener and Lake Erie. I’ve been inside homes and studied every local market in the Hamilton, Niagara and Kitchener, Waterloo area.

What’s my favourite restaurant?

My favourite restaurant is my home. I love to cook and prepare meals, so it’s always my first choice. But second to that is any farm-to-table restaurant in the Hamilton and Niagara area.

Something people are surprised to learn about me?

I started and ran a home décor manufacturing company for 16 years in Waterloo, selling across Canada and the USA, while doing that I built my real estate portfolio in Kitchener, Waterloo to build passive income. I love boating (almost as much as real estate) and I ride a Ducati motorcycle.

https://www.realestatemvs.com