Investment FAQ's - First Time

The reason real estate is one of the most common methods for building wealth is due to a combination of factors. We talk extensively about how it all works in our monthly seminars, but basically it comes down to:

Debt Paydown/Equity Building
Month after month, someone give you money to pay down your debt and increase your net worth

Monthly Cashflow
When your rental income covers more than your monthly expenses on the property, the left-overs are gravy

Appreciation
Your net worth increases as property values increase

Leverage
Banks help us buy real estate that is worth several times more than the down payment required of us

Tax Advantages
An accountant well-versed in real estate investing can explain all the write-off

This is common questions. We have a low vacancy rate in this area, which means that there is an abundance of people looking to rent. Finding tenants will not be an issue. We can help you with this and ensure that they are quality tenants.

You’d be surprised, but there are actually really amazing tenants out there who treat it like their own home. Those good stories never make the headlines though. Reality is, there are risks involved with anything that is worth doing. You have to accept that the road may not be perfectly smooth all the time, but as mentioned, when you screen the tenants as we suggest, good tenants are the norm…not the exception.

I understand what you’re saying and let me give you an example to help illustrate. RERER TO “VALUE OF REAL ESTATE / LOW CASH FLOW' OBJECTION HANDLER.

Good question. There are a few ways that this can be done, and by far the most common way is to leverage equity you have in a property you currently own.

The type of property we would recommend usually depends on your goals, experience, your current financial situation, your risk tolerance, and how the actual numbers work on the different opportunities available. So depending on all of this, the best property for you to buy might be something like a semi-detached, a townhouse, a condo, a single family home or a multi-family, or commercial property.

PROS AND CONS OF DIFFERENT TYPRES OF REAL ESTATE

SEMI-DETACHED / TOWNHOMES / SINGLE-FAMILY

The advantages to these properties is that there are more of them available, they are typically easier to buy (less expensive, less complicated), easier to sell (because they are always in demand) and they tend to appreciate a bit more than multi-family real estate.  These are also easy to rent and typically don’t require much management.  The key is to find one in a good location where the price point allows for the area’s market rents to cover your monthly expenses.

PRE-CONSTRUCTION CONDO

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MULTI-FAMILY RESIDENTIAL

While typically harder to find, multi-unit residential properties (duplex, triplex, 6-plex, 12 unit apartment buildings, etc. ) can offer more in terms of monthly cashflow.  The price point is usually higher and the value is determined primarily by the income and expenses of the property.  As such, multi-family properties don’t appreciate the same way single family homes do (adjusting with the market), rather the value tends to increase based on net operating income.  That being said, with the right opportunity, investors can ‘force’ appreciation on these properties (Ex. where a property has been mismanaged or where improvements could be made that would increase the rental income of a particular property.)  Management of these properties is usually a bit more demanding, but in the long-term it can pay off. 

COMMERCIAL REAL ESTATE

Commercial real estate can be a lucrative option for the right investor.  Usually these investors come with specialized knowledge and access to a healthy amount of capital. The value of commercial real estate (retail plazas, malls, buildings with office space, industrial property, etc.)  is primarily based on the rental income of the property (determined using price per square foot). With businesses as tenants, you often get longer-term leases and cash flow stability than you would typically find in residential real estate.  Conversely, when vacant, it is typically more difficult to lease the space, because of the specific needs of businesses looking to rent.