Different Ways to Invest in Real Estate
Being mortgage brokers in Calgary, AlbertDan Heon and the Canadian Mortgage Team Alberta have three decades of collective experience in local real estate investment. Through their years of experience, they are the perfect choice for helping you figure out both your mortgage and real estate investment needs.
Buying real estate is about more than just finding a place to call home. Investing in real estate has become increasingly popular over the last 50 years and has become a common investment vehicle.
The real estate market has plenty of opportunities for making big gains, but buying and owning real estate is more complicated than investing in stocks and bonds. In this blog post we will go over the basic types of real estate investment, to help give you a clearer idea of this effective type of investment.
For starters, you have residential rental properties. In this type of rental, a person will buy a property and rent it out to a tenant. The owner, the landlord, is responsible for paying the mortgage, taxes and costs of maintaining the property. In an ideal scenario, the landlord charges enough rent to cover all of these expenses. For this type of investment, the long-term wealth comes from the property appreciating in value, while your tents are paying off your mortgage in the way of rent.
Perhaps the biggest difference between a rental property and other investments is the amount of time and work you have to devote to maintaining your investment. Another thing to consider is the responsibilities that fall on the landlord, which can be costly and time consuming.
The second type of rental are commercial rental properties. With the commercial and retail industry making a sustainable comeback in Calgary, this type of rental has become very profitable. While these types of rentals have higher upfront costs, the monthly revenue stream is also higher, with business leases usually lasting much longer then residential ones.
The first kind of house flipping happens when properties are bought with the intention of holding them for a short period of time, often no more than three to four months, after which they hope to sell them for a profit. In this scenario, you are trying to purchase properties that are being sold below market value, and then sale them back at a high value.
The second type of property flipping occurs by buying reasonably priced properties and adding value by renovating them. in this scenario, you buy a property at low cost because it needs significant
renovations. You budget for your renovations, and then you put the newly renovated home on the market at a price that exceeds the purchase and the additional cost of renovations.
Real Estate Investment Trust (REIT)
A real estate investment trust (REIT) is created when a corporation (or trust) uses investors’ money to purchase and operate income properties. REITs are bought and sold on the major exchanges, just like any other stock. REITs are a solid investment as they offer a regular source of income, and are not as volatile as the other forms of real estate investing.
If you are looking at venturing into real estate investing, Dan Heon and The Canadian Mortgage Team, have years of experience and expertise in real estate investment. We identify individual needs and goals and arrange financing accordingly. If you want to take the next steps with real estate investing, contact Dan today.