Many people have often thought about picking up an investment property in Brampton, and why not? It’s a fantastic way to invest some money, and know that down the road, you will be able to reap the rewards, handsomely, if you play your cards right!
Investing In Brampton Real Estate – The Right Way!
So, what exactly do I mean by this? Well, it’s very easy to rush out and buy a house or a condo, or a triplex etc. That is, buying is easy. Selling, on the other hand, can be more challenging, when you haven’t done your homework. If you buy a some real estate, and don’t get it for the right price, then selling that property, or at least trying to create a positive cash-flow situation can be very difficult. So, doing a proper analysis of the market, gauging supply & demand, and pricing are key. We do all that for our clients, for each investment scenario.
5 Investment Factors to Think About:
1. How long do you want to have this property for? Is this going to be a quick flip, or are you going to be married to the property, or something in between? Each scenario demands a different level of “homework”. For example: A quick flip requires that you purchase under market value, or at least be a fixer-upper that, once fixed up, can net a profit.
2. Type of Real Estate. What exactly do you want? A condo apartment, a condo townhouse, freehold townhouse, semi-detached, detached, duplex, triplex, four-plex, apartment building, plaza etc. etc. As you can see, there are many choices available, but each style of property has it’s own unique benefits and potential problems. Decide carefully!
Sidenote: This point touches on the condominium scenario vs. freehold. Look out for another post here, that explains the differences. The scope of that topic warrants a standalone post.
3. Are you going to self-manage your property? If not, then you need to choose a property manager. If you buy a property far away from your home, then you will definitely need a property manager. My recommendation is to purchase a property that is only a short drive away (45 min…an hour max) from your home. If problems occur, and they will, you don’t want to feel paralyzed by the distance. If you need to take time off of work to solve a problem, then that problem could potentially cost you way more than the problem itself.
4. Financing. What kind of mortgage, and how much down payment? This is another point to think about carefully. What’s your risk tolerance. Some folks want to be very flexible and ride the short mortgage terms, or the variable rates. Others need to know that they’re locked in for 5 years or longer. If you want the short terms, and/or variable rates, then you need to be watching the interest rates constantly, and be prepared to react quickly, if need be. It’s best to use at least 20% down payment, if you can. It would mean eliminating CMHC fees. Depending on the price range of your purchase, CMHC fees can easily balloon to well beyond ten thousand dollars!
5. Ownership and Partnerships. Are you planning to purchase alone or with a partner/s? This is one touchy topic, if you’re planning on purchasing with a partner or multiple partners. We all get into a venture with the best of intentions. However, life has a way of changing the landscape, and best of intentions don’t mean anything when the chips are down.
The way to eliminate as many problems as possible up front, is to have a solid contract between the partners, including a shot-gun clause etc. etc., or just go it alone, and make Factor 5 a non-issue. Having said that, partnerships can create a lot of strength and enable the acquisition of much real estate quicker than flying solo.
Nothing Replaces Experience
While this post is far from exhaustive, it does touch on the crucial factors to think about. If you do nothing else, act on what you have read here, and you will be further ahead than most folks who rush out and buy something with limited thought and research. Without a doubt, there will be postings here, created by Lorne Deffett and myself, about investing in Brampton real estate, and all the subtleties, nuances, pitfalls and best practices.
Now, what makes the brayleydeffett real estate team a great asset to have in your corner, is the fact that we’ve been landlords, business owners (including a bar and a pizza business) and property managers. Call Lorne (416) 315-0726 or myself, Tony, (905) 867-9440 with any questions, or to set up a confidential meeting, to discuss your investment plans and explore the best options for you. Use our experience to ensure you have the best possible odds of making great money with your purchase of any Brampton investment properties.