Last week, we introduced you to two different ways of real estate investment options: investment condos and investment properties. If you felt like those options weren’t for you, or you simply wanted to weigh all your options before deciding - here is part two! Today we will be discussing flipping, mixed-use properties and new constructions.
Real Estate Investments Option 3: Flipping
While it isn’t as popular as a few years ago, flipping houses (in other words, buying a rundown house and renovating it for profit in under a year) happens every day in Toronto and the GTA. It isn’t for the faint of heart – but it can be hugely profitable.
The Pros
• A proper quality flip in a good neighbourhood will be in high demand (many of today’s buyers want the fully done-up house)
• Cash! There are certainly lots of examples of houses bought for $900,000, renovated for $150,000 and sold for $1,300,000+.
The Cons
• Renovations always take longer and cost more than you expected. With a flip, every dollar spent and every month where you have to pay a mortgage counts.
• No matter what HGTV tries to tell us, flipping for profit isn’t easy – it takes a lot of time and can be a risky venture for someone who isn’t a contractor or tradesperson
• There are just as many examples of houses bought for $900,000, renovated for $150,000 and sold for $1,100,000.
If you’re considering buying a home to flip it, make sure you’re working with a REALTOR who knows the game and can make sure you buy the right property, put the right amount of money into it for the neighbourhood and sell it at the right time.
Investment Option 4: Mixed-Use Properties
Many investors turn to the GTA’s mixed-use properties for their ROI. Mixed-use properties have both a residential and a commercial component and if purchased in up-and-coming neighbourhoods, can be an excellent real estate investment. Note: the financing and buying process are very different than the standard resale residential market, so make sure you hire a mortgage specialist experienced in financing these types of commercial properties. Ask your REALTOR to refer you to the right mortgage specialist.
Real Estate Investments Option 5: New Construction
This used to be the number one real estate investment in the GTA– buying condominiums during the pre-construction phase and selling them when they were built (often up to 5 years later).
The Pros
• Prime choice of units and location, as you aren’t at the mercy of what happens to be on the market
The Cons
• Currently, it’s cheaper to buy a resale condominium
• Builders may cancel projects, tying up your down payment for years
• More projections required – what will it be worth and what will it rent for when it’s ready for occupancy?
Managing Your Investment Property
There’s a lot to know about being a landlord – it’s important to do your homework beforehand. If you’d rather outsource the management of your property, there are plenty of options in the GTA. In the GTA, you can expect to pay about 6% of the monthly rent in property management fees for a condo, and 10% for a house.
Thanks for reading today’s BLOG!!!
Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com
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