The current state of Canadian real estate is difficult to determine since it is flourishing at a rapid rate. The rates and prices are on a constant rise across the areas like Oakville, Toronto and the Greater Toronto areas. The demand for property has seen a considerable boost while the inventory in this market has always been low.
This makes it a complex market to get your investments done in real estate. So, what are your options when you want to buy, sell or invest in such a proliferating market? We are trying to list some of the most important real estate investment tips that you need to be aware of in the first place.
Determine home affordability first by keeping aside your emotions
If you are currently obsessed with the visual aesthetics of your new home and worry about bamboo floors and granite counters more than anything, you need to rethink the entire possibilities. When you are wanting to invest in real estate, you should determine the profit percentages that the above aesthetics are going to bring you. These will just couple up to the monthly rentals that you would be paying. The numbers that you should think and worry about are the taxes you need to pay after buying the house or the maintenance costs that are attached to it. These answers will help you have an actual idea of the numbers before you jump into buying the house.
You should know your home affordability capabilities before you jump into any investment. You will be required to pay off the amount you want to finance. For that, the ability for you to earn through the investment is necessary. Though Oakville real estate is more expensive as compared to its neighboring areas, with the right research, you are sure to get the best deal.
Consider the early financing option
Canadian banks are known to be quite conservative when it comes to dispersing mortgages for rental properties. The financing approval won’t come to you so easily and hence the key to better implementation is planning. The first and basic step will involve your private lender or the bank to analyze your capabilities to pay off the debt in a 28/36 ratio. This will be calculated based on both your primary home and the new investment you are getting into. They will also check your ability to pay off the mortgage if there’s no rental income from the investment property. They just want to ensure that your empty property doesn’t become the reason for no payments.
You will likely need a down payment of about 20%
The prospective real estate investors will only put their money in properties that are already listed for sale. This is because they see it as an alternative source of income or a completely justified retirement plan. The properties they want to acquire are not their primary home. This makes the property susceptible to qualifying for mortgages only upon paying higher down payments. The banks would go for an average of around 20%. Without having all this planned, you might not be able to manage your finances perfectly in the future.
A fixer-upper for the first-time investment is not a good idea
An investment this large is an overwhelming experience for anyone, especially if it is a first-time real estate investment. It becomes even more stressful if you are planning to renovate the property. As a first-timer, you should not stress yourself much. However, if you are a specialist in home repairs, you can consider doing it. But for those who are not, it is better to invest in properties that are already in good condition and do not require any more investment.
Choose the neighborhood very wisely
Do you remember the time when you purchased your primary residence? You had hand-picked the best locality by far and you were ready to pay for it. However, this same thought process cannot be applied to your investment property since it will come with high insurance and maintenance costs. Instead, it is recommended to invest in properties available in a humble neighborhood, which will offer affordable prices. Even experienced brokers or mortgage agents will suggest the same.
Keep in mind the extra expenses
You should always have some extra money kept aside for additional expenses that might come your way. Factors like property taxes and condo fees can increase your cost per month. You can also ask your broker to help you with a comparative analysis of the property costs in your preferred neighborhoods. Call up your insurance provider too to get the costs discussed for more clarity. Have sufficient money to deal with extra expenses.
You can reap the benefits of real estate investment in Oakville Ontario if you go with proper planning and implementation. Always keep note of the above-mentioned points while investing and never hesitate to take expert help whenever required. Advice from experienced brokers will help you make the decisions that are in your favor. No doubt, realty investments are challenging but with the right strategy, you are sure to get the best possible results.
