Ways to invest in real estate

home for rentMagnifying glass

While investing is often associated with stocks and bonds, the Canadian real estate market provides potential investors with plenty of lucrative opportunities. When mortgage rates are low and properties are available, savvy buyers can make a tidy profit in the housing market. However, before an individual decides to invest, they must understand the different ways to invest in real estate, as well as the advantages and disadvantages of each.

Buying, selling and renting
Buying real estate directly is the most common way to invest. Buyers typically purchase a residential property at a low price, renovate it or wait until the market improves, and sell the property at a profit. Buying homes also presents Canadians with the chance to become landlords. Purchasing a property and renting it out to tenants can be a great way to bring in extra income on a steady basis. Continue reading

Dealing with debt

Home laons good debtMagnifying glass

There’s been a lot of talk in recent months regarding household debt in Canada, much of it related to home loans. However, a new article in The Globe and Mail makes the case that debt incurred through purchasing a home isn’t necessarily a bad thing. Debt is a fact of life; the key is differentiating between debt that can help you and debt that can hurt you.

The article makes the case that debt is a necessary and useful tool when it comes to investment. After all, there’s a big difference between maxing out a credit card in order to buy a shiny new toy and taking out a mortgage in order to purchase property that will grow in value over time. Continue reading

Paying for home renovations

home renovationMagnifying glass

Purchasing a property may be the first step to living in your dream home. Whether it’s adding a room, building a pool or anything in between, home renovation can be a financial burden outside the world of mortgage rates and closing costs. Luckily homeowners have a number of options when it comes to paying for home renovations. The important part is figuring out which method works best for you.

Credit card
Qualifying for a credit card may be easier than getting a loan from a bank, but it can also be riskier. Credit card interest rates tend to be high, meaning that if you use your credit card for large renovation projects and don't pay your balance in full each month, the amount you owe can skyrocket quickly. Also keep in mind that keeping the balance for too long can harm your credit score. If you do plan on using a credit card to pay for home renovations, use it sparingly and only for smaller projects. Also try to find a credit card with low interest rates and generous repayment terms. Continue reading

Buying a vacation home

vacation homeMagnifying glass

With mortgage rates near historic lows and home prices becoming more affordable, now might be the perfect time to consider purchasing a vacation home. A vacation home not only offers comfort and convenience, it also acts as a financial investment for homeowners.

Of course, it’s important to plan out your decision before scooping up a second property. By taking the most important aspects into account, you can ensure that your vacation home will offer fun and security for you and your family for years to come.

Location
When it comes to vacation homes, location is one of the most important features to decide on. How close do you want the vacation home to your primary residence? Should it be in a more urban or rural locale? What areas do you visit most often? Continue reading

Buying a rental property

Rental propertyMagnifying glass

For Canadians looking to add to their income, investing in a rental property is an attractive option. Acting as landlord and renting out a home allows you to collect extra income in a much simpler way than taking on a second job. Best of all, you get to act as your own boss, allowing you to make money on your terms.

The current state of the housing market is also making buying rental properties an appealing alternative. Canadian mortgage rates remain at historic lows, meaning home loans will cost you far less in interest down the line. Meanwhile, a report from the Royal Bank of Canada shows that home affordability is on the rise throughout the country.

Data from the RBC’s affordability index shows that the total income necessary to afford a two-story home has decreased by 1.2 percent as of the most recent quarter, reaching 47.8 percent. Detached bungalows and condominiums also saw declines, falling to 42 percent and 28 percent, respectively.

However, certain hurdles remain on the path to buying a rental property. Luckily, proper preparation will allow you to smooth out the buying process and ensure a good deal on your investment. Continue reading

Cooling housing market creates opportunities for buyers

Real estateMagnifying glass

While speculation regarding the cooldown in Canada’s housing market usually takes a negative spin, a report from the Royal Bank of Canada shows that falling home prices are opening the door to affordable housing for many prospective buyers.

Stricter regulations affect home prices
A report from the Teranet-National Bank shows that Canadian housing prices declined from September to October, marking the third time in 13 years of data that prices declined during this time of year.

Despite data from the bank’s national composite house price index showing that October house prices were up an average of 3.4 percent across the country compared to the same time last year, October also marked the 11th consecutive month of deceleration for year-over-year price increases. October experienced a 0.2 percent drop in average house prices from the previous month. Continue reading

Homes are more than just possessions for Canadians

Magnifying glass

Most purchases are for transitory goods. Picking up the latest electronic toy might be fun, but in the end, it’s an ephemeral buy, something to be traded in as soon as a new upgrade is available. Buying a home, on the other hand, represents a much longer-term investment. A house is where you lay your head down at night, where you raise a family, where memories are created and shared. Of course, it’s also a more expensive purchase than your average phone or television. The point is, homes are more than just possessions, they’re investments.

According to a new poll from Scotiabank, most Canadians agree.

Data from the poll shows that 77 percent of Canadians view their homes as investments rather than expenses. When broken down by region, the number of homeowners who consider their houses investments is highest in Manitoba/Saskatchewan, Quebec and Alberta.

When you take this outlook into account, it’s easy to see why household debt continues to be a topic of contention across the country. If homebuyers see their purchases as investments for the future, chances are they won’t be turned off by incurring debt. Interestingly enough however, the Scotiabank poll also found that nearly half of Canadian homeowners have done away with mortgage debt. Continue reading

So you want to be a landlord: What you should know before you jump in

rental incomeMagnifying glass

When you think about it, landlords have a pretty great job: They always take their time calling the washing machine repairman, they get to relax behind-the-scenes most of the time (and probably sleep in, too), and – best of all – they get checks in the mail every month for doing very little work.

All of that sounds pretty great, huh? Kind of like a gig you wouldn't mind trying out? While I'm sure some of you are rushing out to pick up some investment property or spruce up your basement for a future tenant – can you at least wait until the end of this article? – let me say that being a landlord isn't quite as easy as it might seem. Actually, it's downright complicated, even for the landlord who seems to go missing every time you need him or her, but can't leave you alone when rent is due.

Experts are saying that now is the time to buy investment property if you are ready for the commitment and have weighed the pros and cons. Banks are offering such unbelievably low mortgage rates that the Canadian housing market is in dire need of a cool-down. To do this, new qualifying rules were set, except they make it difficult for otherwise excellent potential buyer candidates to afford a mortgage while still budgeting for other daily and monthly expenses. Continue reading

Commercial buyers: Now may be the right time to make an offer

commercial new purchaseMagnifying glass

Many experts will attest that the Canadian housing market is inflated and seemingly oversaturated thanks to incredibly low interest rates, but how is the commercial real estate outlook for business owners looking to buy a space to expand or to lease to other businesses? The Bank of Montreal says now is a particularly good time for investors and businesses of all sizes to invest in commercial property.

"There is a strong demand for these properties by users, who are often able to lease out part of the property for additional rental income," said BMO vice president Steve Murphy.

Commercial investment properties have the potential to do well in the current economy, making it a generally low-risk option for business owners looking to get a bit of financial cushion for their balance sheets. Additional factors that make the investment prospect attractive include:

– Higher occupancy rates, which affects availability and reduces vacancies

– Increased lease rates

– Predicted continual Canadian economic growth Continue reading

Go big or go home… Or go to the US

Canadian and American flagsMagnifying glass

O Canada, our home and native land: Why must your houses be so expensive? It seems like every other day you can find a story in any of the major papers about home prices rising, bubbles about to burst and government ministers freaking out over debt.

It's been getting harder and harder to play the property game in Canada, which could be why a lot of folks are turning their sites to the south. The U.S. housing market is more affordable than it's ever been, with low mortgage rates and an incredible amount of foreclosure properties available. In fact, Canadians are buying up more U.S. properties than any other foreign group. The National Association of Realtors, a U.S. housing group, recently came out with some interesting numbers:

• Between March 2011 and March 2012, foreign buyers spent $82.5 billion on U.S. homes, up from $66.4 billion the previous year
• Canadians comprised 25 percent of all foreign purchases during that time, more than twice the amount of Chinese – 11 percent – and three times more than Mexicans – 8 percent
• Although 45 percent of foreign purchases were less than $250,000, the average price paid by foreign buyers was $400,000 Continue reading