January 12th, 2022 | Buying

Are You Ready for a Major Real Estate Investment?

[et_pb_section fb_built=”1″ _builder_version=”3.22″ da_disable_devices=”off|off|off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”3.25″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”3.25″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”3.27.4″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}”]Without a doubt, a wise real estate investment can lead to a more affluent lifestyle—and a more secure financial future. While it is tempting for would-be investors to jump in and begin the property search, it is important to consider timing. Are you wondering if you are well-positioned to take this significant step now?

Here are a few signs that it might be the right time to start investing in real estate…

You have the funds to get started

Lenders tend to see investment properties as a bigger risk than those that are being purchased for residential purposes. For this reason, they tend to charge more in interest for loans them—and ask for higher down payments. They also want to know that investors have the cash on hand to pay down their mortgage if a disruption to their financial situation occurs.  

At the very least, you will likely need to have 20 per cent ready to go for your down payment. Remember that maintenance costs can start piling up quickly, so you will want to have a sizable cushion to cover them before you buy, as well. If you have to scrimp to get that initial amount together, it may be a sign that you are not in the best possible financial position to invest.

On the other hand, if you have the liquid assets to cover your down payment, mortgage payments for the next six to twelve months, and then some, you may be in good shape to invest in real estate. When in doubt, consult with an experienced financial advisor. 

Are you thinking of investing in luxury real estate? Learn how the high-end market has changed over the last 20 years—and what it means for your purchase—here.

You’re ready for the time commitment

More often than not, investors are successful professionals. Reaching the point where you have the funds to purchase real estate as an investment takes dedication, and that is a good thing—so long as you also have the bandwidth to manage your property. 

From ongoing maintenance to marketing effectively and staying on top of legalities, a lot goes into being a landlord. While real estate can be an incredible source of passive income, do not underestimate the time and effort that goes into ensuring it is a success.

The good news is, managing an investment property does not have to be a full-time job. Finding a trustworthy and credible property manager can take some of the weight off of your shoulders. Whether you plan to enlist help or embrace a more hands-on approach, just ensure that you have time to build a plan. 

You’re okay with a little risk

Torontonians love to discuss real estate—and the benefits of investing in it. As a result, those who are new to the market sometimes feel that they can do no wrong. Of course, every investment comes with some level of risk (though it can be significantly reduced if you hold a property long term). 

While it is true that real estate can hedge against inflation and provide significant returns, the market is still subject to change. When it does, property cannot be sold at the drop of a dime. Simply put, you should be aware that there is some risk associated with investing in real estate, and plan accordingly. If you are ready to do that, it may be the right time to invest.

Are you prepared to start the search for your perfect investment property? Get started by viewing our featured listings here.

You have a basic understanding of the math

Investing in real estate does not have to be complicated, but it is still important to make informed decisions. In order to do that, you need to run the numbers. That means understanding the rent you can reasonably charge for a given property, and the annual expenses you will have to pay.

There are also a few simple metrics you will want to consider. For example, your capitalization rate (also known as your cap rate). This number can be found by taking your annual rent, subtracting your annual expenses from it, dividing the result by the cost of the property, then multiplying that number by 100. As a very general rule, lower cap rates are good for investors, as they can indicate lower risk (though assessing other factors is key).

You feel confident about finding the right team

Making a wise real estate purchase is a major undertaking for even the most seasoned buyers. Managing one, even more so. Fortunately, you do not have to do it alone. Savvy investors assemble an experienced, talented, and reliable team to advise and assist them.  

During your search, the right financial advisor, lawyer, and real estate agent can ensure that you make a smooth, low-stress purchase—and find a space that will help you meet your goals. From there, you will want to find professionals who can prepare your space (from lenders to contractors and cleaners). Depending on your circumstances, you may also want to find a proven property manager.

Given how high the stakes are (especially if you are buying luxury real estate), it is worth doing some research online and interviewing service providers who meet your standards.

Our team has extensive luxury real estate expertise. If you are wondering how we can help you, read the resources below to learn more about us.

You’ve done some thinking about retirement

Lastly, no matter what stage of life you are in, saving for the future is critical. Whether you are in your 20s or your 40s, you should be regularly putting funds aside to secure the lifestyle you deserve down the line. If you have not, it may be wise to hold off on making a major investment—at least until you have begun amassing a nest egg that you will not have to touch to invest.

If, on the other hand, you have saved a decent sum, now might be a good time to take on investment (and the risk that doing so entails). A skilled financial advisor and a real estate professional who has experience with income properties can help you make the most of a good situation.

To set up a buyer’s consultation with our team and begin discussing your investing goals, simply get in touch.  


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