How to Invest in Real Estate in Canada

4 Aug

There are many different ways to invest in the real estate market, from REITs to duplexes to rental properties. 

The following article will teach you how to get started. Once you’ve decided to invest, you need to do some real analysis. 

Consider how much you can expect to receive in rents and expenses, and what you can expect to get out of a real estate deal. After all, this is your investment, after all.

Investing in a REIT

Investing in a REIT ( Real estate investment trust )  enables you to diversify your investments. Unlike individual stocks, REITs can invest in a wide variety of real estate properties. 

In Canada, you can choose to invest in income-producing properties or rental properties, or you can choose to invest in mortgages and other residential real estates just like any house for sale in Chilliwack BC

REITs in Canada typically carry a high debt load, as they usually finance a property with significant leverage. Therefore, it is important to look for a company that can effectively manage its debt.

Another advantage of investing in a REIT is its track record. Real estate is a highly profitable investment, but it is hard to save for a down payment and renovate a property. 

However, you can invest in a real estate investment trust (REIT) and enjoy the benefits of investing in real estate without all of the hard work and legwork. It pays regular dividends and has a proven track record of increasing its value.

Investing in a REOC

Real estate operating companies invest in, develop, and sell real estate, usually for a profit. REOCs ( Real Estate Operating Company ) don’t pay dividends but instead reinvest their profits to expand their business. 

Some REOCs invest in distressed properties or develop new properties. Investors should look for high returns on their investments in these companies. 

The following are some of the benefits of investing in a REOC. These benefits aren’t necessarily the same as those of other types of real estate investment.

Real estate operating companies are ordinary taxable corporations that own real estate. They are usually more successful in cities where real estate tax benefits are low or nonexistent. 

REITs also have lower minimum investment requirements than REOCs, which limit investors’ personal liability. 

Investing in a duplex

Owning a duplex is an excellent investment strategy because it provides you with an income stream while renting out the other unit. Additionally, you can qualify for FHA financing and live in one unit while renting out the other. 

However, owning a duplex has its downsides as well. These disadvantages include maintenance, potential damages and vacancy. 

For first-time investors, a duplex may be the best option. Renting out half of a duplex is an excellent option. This option allows you to live in the property while making money from the other half. 

In addition, renting out the duplex allows you to cut down on the monthly mortgage and insurance payments. Eventually, you’ll have a positive cash flow and a second income.

Investing in rental properties

Investment properties can give you a steady stream of cash flow, and some real estate investors recommend holding onto investment properties for five years or more. 

They say that these properties will yield an average annual return of 7% to 8%. You should also take the long view when investing in rental properties. 

Being a landlord can be a big responsibility, so make sure that you have adequate renter’s insurance. The Motley Fool recommends a five-year holding period.

Investing in rental properties in real estate is not for the faint of heart. If you approach it like a business, it can pay off handsomely. You can expect a steady stream of monthly income, but you should be prepared to do some work to keep your income coming in.