Tips and Techniques for Profitable Real Estate in Toronto
Getting into real estate can be an exciting endeavour. If done correctly, it’s a chance to reap some significant financial rewards, especially in Toronto’s booming housing market. From finding the right property to working with a knowledgeable agent, there are many factors to consider. If you’re interested in exploring real estate investment opportunities, here are some tips and techniques to help set you up for success.
1. Choose your location wisely
Whether you’re looking to flip a home or purchase an income-producing property, one thing’s for sure: choosing the right location is key. In the GTA, some neighbourhoods are more lucrative for real estate investments than others. Consider locations with a growing job market, as these areas tend to attract more people.
Although there’s nothing wrong with renting out your home in a Newmarket subdivision, this type of endeavour will do much better in an area with a large rent/own ratio. Subdivisions and family-oriented neighbourhoods tend to attract owners as opposed to renters. Therefore, pick communities that are close to office buildings and post-secondary institutions. For example, properties in the Annex can be very profitable investments because of their close proximity to the University of Toronto. Similarly, condos just off Bay Street can be rented out fairly easily to working professionals because they’re so close to the financial district.
It’s true that real estate in busy, thriving communities will be much more expensive than homes in the suburbs. But if you can get your finances in order, the upfront investment will be well worth it in the long run.
2. Investigate average rent prices
If you plan on renting out the property, the incoming rent will become your staple. Before committing to a purchase, find out what the average rental rates are for that area. Only proceed further if you can get that amount or more. A good real estate agent can help you obtain some accurate figures by investigating nearby rentals.
At the very least, you’ll want this monthly income to cover your mortgage payment, property taxes, and miscellaneous expenses like home insurance. And think about whether the tenant will be paying for utilities separately, or if you’ll lump these costs into their monthly rent.
3. Ensure the property’s layout is in line with your goals
It’s better to find a property that suits your needs, rather than try to reconfigure it. Simple cosmetic renovations are already very costly. So imagine the amount of money you’d have to spend to tear down walls and create a whole new layout, not to mention all the bureaucracy you’d have to navigate to get municipal construction permits.
If you’re looking for a duplex, find a duplex. Don’t try to convert a single-family home into a multi-unit residence just because you like the neighbourhood and asking price. Make sure the real estate you’re buying is as close of a match to your needs as possible. Otherwise, you’ll be spending a lot of your time and money trying to turn a property into something it’s not.
4. Understand the amount of work involved
With traditional stock investments, all you have to do is tell your broker to buy or sell. Real estate investments, however, typically involve much more work on a day-to-day basis. Unless you’re okay handing over some of your profits to a property management firm, being a landlord is like having a second job.
You’ll have to be on-call 24/7 to deal with tenant issues, which can include broken appliances, leaky roofs, and noise complaints, to name a few. You’ll also have to ensure your tenants pay their rent on time and hunt them down if their cheque bounces or their payments are late. Additionally, there’s all the work involved when a tenant moves out, like finding a new one and ensuring the apartment is ready for occupancy. Owning an income property is much harder than just watching the cheques roll in each month.
5. Work with a reputable real estate agent
Unless you’re Warren Buffett, you may not want to go about a real estate investment alone. Rely on the expertise of a reputable agent to help you navigate Toronto’s housing market. Not only can this knowledgeable professional introduce you to some great sales listings, but he or she can also be helpful in the following ways:
- Offer insight on the GTA’s most lucrative neighbourhoods for profitable real estate.
- Get you a pre-approved loan by putting you in touch with a network of trusted financial professionals, including mortgage brokers.
- Take care of the paperwork involved in putting together an offer.
- Fight for you in a bidding war, so you can get the property you want at a fair price.
Spectrum Realty offers a team of real estate professionals you can trust. Whether you’re looking for an income property or a primary home, rely on our team to help you find success in Toronto’s lucrative housing market.
For more information on real estate investments, call Spectrum Realty at 416-736-6500 or contact us here.