Real estate offers a world of opportunity when it comes to earning money in the near and distant future. The right investment brings about passive income, whether through a REIT, direct ownership or addy’s unique crowdfunding platform. Still, despite a booming Canadian real estate market, investing takes proper planning, understanding and money upfront.
Here are some tips to help you find success when investing in real estate.
Real estate investing tips
1. Know your options
There are a few different ways to invest in real estate, each with varying levels of involvement, risk and reward. Owning property and renting it out can potentially lead to a steady stream of revenue, but there are many costs that can set you back. Any maintenance issues and tenant disputes fall on the landlord to fix; if you’re doing it yourself, it will take money, time and energy. A property management company can assist, but it will take money out of your pocket.
A REIT, meanwhile, allows a company to invest money for you; in most cases, you won’t know the exact properties, but you’ll be able to buy and sell shares, taking money out of your investment as needed. This option is more fluid, though it requires active involvement in order to make the most money. There also tend to be taxes and fees involved.
Crowdfunding real estate, alternatively, pools money from a number of people to invest into specific properties. Crowdfunding is popular among those who feel shut out by the housing market, as large down payment prevents younger generations from being able to buy property.
addy enables members to invest as little as $1 into a property; a Charter Membership with addy only costs $25 for one year, and there are no fees attached when investing.
2. Set goals
Before you invest in anything, it’s important to be clear about your financial goals in the short and long term. Assigning goals requires a proper plan in place, which details how much you are willing to invest and when, as well as your appetite for risk.
Some crowdfunding investments, for example, may not yield a return for years to come. Owning a house and renting out space can start generating income far more quickly, but acquiring that property and managing it effectively may set you back initially.
3. Find the right location
Consider seeking out emerging and growing neighborhoods to invest in. Big cities like Toronto or Vancouver may have small pockets where there is still value to be had if you can anticipate which streets and sections are poised to build up.
As more people leave the city for suburbs and small towns, there is also value in forecasting where people will settle, especially as remote work allows people to seek out bigger spaces away from bustling downtown city centres.
Successful investment properties tend to be highly accessible, whether by car, transit or walking, and are in close proximity to grocery stores, schools, pharmacies and businesses. Look into city proposals for forthcoming developments – just because these amenities aren’t built yet, doesn’t mean they aren’t on the way. A recent addy near the Tiffany Barton Lands in Hamilton is a great example of betting on the future developments proposed by the city.
4. Diversify
This is a tried and true tip for all those looking to invest, whether in real estate or the stock market. Diversifying your investments allows you to protect any unforeseen circumstances in a particular neighbourhood or industry. It’s wise to spread out your investments in different property types, balancing out risk and returns. That’s another benefit of investing with addy, you can spread your real estate investments across many different properties vs. putting all your eggs in one basket.
5. Seek out professional advice
Guidance and direction from professionals, advice from mentors and your own research will help arm you with the tools needed to succeed when investing. While addy does not offer professional advice, the process of investing is designed to be simple, transparent and accessible for all who are interested.
Crowdfunding with addy
With a belief that everyone should be able to invest in real estate, addy welcomes members of all backgrounds; there is no wealth or experience thresholds. Investments can be made on specific properties for as little as $1 – and the only liability is the investment itself.
