Investing in Calgary / Edmonton Alberta Real Estate?
You’ve come to the right place. Dan Heon and the Canadian Mortgage Team Alberta has three decades of collective experience in local real estate investment. Below you’ll find answers to your questions about investing in Calgary, Edmonton and the surrounding area.
How Does Real Estate Investment Work?
Real estate is the original form of investment. Throughout history it has served as a primary means of attaining affluence. It comes second only to being born into wealth, and even that likely started with a home on a great plot of property. Today, real estate investment remains as one of the top four asset classes.
How does it work?
It starts with that first property. You need to buy-in. But before you do, you need to define your goals. Are you seeking an immediate return on your investment (ROI)? Are you hoping for a consistent revenue stream? Are you looking to build your equity while taking up residence in the property? These are the main questions. From there, you look towards the methods that will help you reach your goals.
Ways to Turn a Profit with Real Estate
The following includes the tried and true ways to generate a lucrative return on your real estate investment:
Buy & Hold – This is a long term investment that is appealing to households and pure investors alike. As a household, it allows you to take up residence while building your equity as the property appreciates in value. You can borrow against this equity to capitalize on other investment opportunities and diversity your portfolio, or you watch the property value appreciate until you are ready to sell, earn a profit, and upgrade to another home. Pure investors do the same, but they can also earn a monthly revenue stream by renting the property (see below) until the time comes to sell the property at a profit.
Buy & Flip – This is a shorter term investment where you buy a property and look to put it back on the market as soon as possible at a price that exceeds your purchase price. The concept applies to two main scenarios. For one, you can buy a fixer-upper and flip it when fixed. This appeals to those with general contractor connections, or a knack for the work itself. In this scenario you buy a property at low cost because it needs significant renovations and/or retrofitting. Your budget includes the work required. When complete, you put the newly renovated home on the market at a price that exceeds the purchase and cost of renovations. The second scenario requires some luck, or at least some good connections with intel on properties that are being unloaded below market value. In this scenario, you have the capital to swoop in and scoop up a bargain and put it back up on the market to sell at a profit.
Residential Rentals – This investment strategy delivers a revenue stream as soon as the property is rented. Optimal cash flow is created when the monthly rental income exceeds the monthly mortgage and maintenance expenses. Alternatively, you may use the property as a vacation rental and/or by putting it on a home-sharing service such as Airbnb. When occupancy rates are favorable the monthly revenue can be extremely lucrative when compared to traditional rental properties. For residential rental investments, long term wealth is created through appreciation of the property, with tenants paying down the mortgage, and through tax advantages.
Commercial Rentals – With the commercial and retail industry making a sustainable comeback in metropolises such as Calgary and Edmonton, many experienced investors are looking to this rental alternative. While the buy-in, additional expenses, and upkeep can be much greater (than residential) the monthly revenue stream is too, especially when lease agreements are often longer term for businesses.
Passive Investment – If you are interested in investing and seeing early returns, but don’t have the time or desire to invest in managing a property, you are what we call a passive investor. Passive investors commonly get involved in a Real Estate Investment Trust ( REIT). A REIT is essentially a group of investors who pool their money together to buy large real estate investments. A REIT can be a very lucrative opportunity, with some areas gaining momentum more than others. For instance, demographics have emerged as a inspiring investing strategy with the aging baby boomer generation driving the demand for retirement residences. In the same way those watch weather patterns to gauge the future value of commodities on the stock exchange, you can monitor demographic patterns to choose the right REIT.
Now you know there’s more than one way to invest in real estate with options that suit your unique needs and resources (budget and time). There’s only one catch. You need to take the first step! The great news, is that you’re halfway there. Simply click here to begin your no-obligation conversation with Dan Heon and the Canadian Mortgage Team Alberta.
Do you still have questions about real estate investment in Calgary, Edmonton, or anywhere else in the surrounding area? Contact Dan Heon and the Canadian Mortgage Team Alberta today!