Real Estate especially in Canada is a very good business or investment to engage in at any time. It is on the rise and most of the people who want to make good money or live better lives are associating themselves with this type of investment. It is doing very well because there are several options it offers ranging from the availability of all the types of houses to various modes of payment. This kind of investment is worth every single coin of yours and that is why you should also join those who are already making it big here. Making the right moves is not only required in other types of investments but also in Real Estate. For you to be able to achieve you just have to make sure that you are doing everything in the right direction.
Be focused on your goals so that you can also celebrate with those who are earning profits. On the other hand, some people still get it wrong when it comes to investing in Real Estate in Canada. They make mistakes that eventually cost them a great deal and in the end, they suffer losses that they could have avoided if they had done the right thing in the first place. A slight mistake could mean something terrible as far as the investment you are trying to make is concerned. At the end of the day, you will blame yourself for everything because the decision to do the right thing falls squarely into your own hands and nobody else’s. So think before you act. Don’t rush yourself but take everything at the right pace step by step. Remember great value is always associated with things that are done right and in moderation. The top 6 things that people get wrong about investing in Canadian Real Estate are listed below as follows:
Expecting great returns after taking equity out of your home
Some investors or homeowners may at times want to increase the number of homes or properties they own. Of course, acquiring more houses needs money and therefore seeking money is what they do. The easiest way that crosses their minds is to take equity out of their homes. While home equity refers to the share of your home’s value that you actually own, taking equity out of your home simply means taking a loan against that value that you actually own. Here people take these loans and then invest the money in new properties with the hope or expectation that they will get immense returns. In the event that their hopes fail to materialize and eventually fail to service their loans, they usually stand the risk of losing their initial property because that is what was used as collateral when taking the loan. This is a risky venture if things don’t go the way you expected or planned. Don’t do it if you are not sure about it.
Not dealing with a reputed developer/builder
The kind of developer or builder that handles a particular real estate project matters a lot as far as the quality of the project is concerned. Good projects are always the products of the good work of developers with good reputations while the vice versa is likely to be true. In simple words, the reputation of a developer is the clear picture of what you will get when you decide to invest in any particular investment property. If you opt for a reputed developer you will be sure of finding the best design that you can ever desire to have. Dealing with a developer who has no good reputation is simply taking the shortest and most risky route to your destination. This is something that several people with the intention of investing in real estate in Canada like to engage in. They most likely prefer something that can take them the shortest time possible to sort it out without figuring out what will happen next. They specifically do this intending to save some money because projects done by developers who are not well known or have less experience will most likely cost less than those done by developers with a good reputation. The greed for saving money makes them compromise their quality not knowing that it will have consequences in the end. This type of greed should be highly discouraged because it is not worth it.
Money will never be enough so don’t go for low standards just because you are thinking about money. You would rather take the longest time looking for a project done by a very experienced developer than rush by going for a project constructed by a less experienced developer and in the end incur losses. Remember cheap is expensive. Many don’t like to hear this but it is the reality. The expenses that you are avoiding today will catch up with you later when you will even not be in a position to sort them out. You better be alert and save yourself this kind of scenario before it is too late. If you have eyes then open them and see for yourself. Don’t just think of today but think of tomorrow as well. Let this lesson always ring at the back of your mind.
Overpaying for a property
It is always everyone’s wish to pay the right amount of money for any project, especially in the real estate market. It feels good to pay what you are comfortable with. In the Canadian Real Estate market, some people usually get it wrong when it comes to paying for a particular property. They pay more than what is required. The amount they pay for a property is usually too high compared to other properties of the same nature in other places.
These people don’t just overpay for no apparent reason. They usually do that because of some reasons such as a high appetite to own a property, lack of research, or even not choosing the right property. Talking of high appetite to own property, there are people who highly want or desire to own real estate property just to be at the same level as their peers who own properties. This is a type of positive competition which is advisable for people to engage in but everything starts to go wrong when people decide to do it blindly without even thinking just for the sake of doing. This type of desire can also be triggered by the mentality of wanting to get rich quickly. Most of the people understand that real estate investments are in great demand and therefore getting rich in this venture can be as quick as you think. So this pushes them to invest with the intention of getting rich as fast as possible not knowing that type of thinking can make them do some mistakes while being obsessed with investing in real estate. All that is at the back of their minds is generating lots of money from this investment so that they can be able to afford all the luxuries they desire to have or be considered among the rich people within their communities.
When it comes to research, there are also consequences either way. It means whether you do research or not, there must be an impact. If a buyer fails to do adequate or proper research regarding the type of real estate property they should invest in, they will more likely end up paying more than what is required for a particular property. This lack of research will not open their eyes to see or get to know the various types of real estate properties available in the market that cost less amount compared to the less that they have seen. It is therefore advisable to do proper research and analysis before engaging in any real estate investment. Just as the real estate market is wide and more demanding, it also requires a potential investor to do maximum research before investing.
Talking of failure to choose the right property, an investor or buyer can also make this mistake which eventually leads to overpaying for a property. When an investor has a number of choices to select from, they may end up selecting a certain property thinking that they have done the best thing or selection but in the real sense, they have just selected a property that will squeeze more of their cash when buying it. If they would have taken the time to choose correctly maybe they would have saved a significant amount of money while doing the purchase. It is good to note that selecting the right property plays a significant role in ensuring that you have channeled your money into the right type of investment and that you won’t have any reason to complain or regret it. You will just have to sit down, relax and watch your investment give you good returns. This will indeed be a dream come true if at all it happens.
Having the invest anywhere and prices will go up mentality
This type of thinking is among the worst you can ever think of. Some people still believe that they can invest anywhere and the prices will automatically go up. This is completely lying to yourself. You have to be sure about where you are investing before you can commit yourself to that investment property. You cannot just carry your money and invest carelessly with the hope that prices will go up. Do not hurriedly invest in a place and then later suffer losses because the prices did not go up as you had expected. You first have to find out more about the price trends of that particular area before you can even think of investing there. Be smart for once and you will not fall for this trap. The control is in your hands so take charge of it.
Doing everything by yourself
Doing everything by yourself is always not a guarantee that you will achieve the desired success. There are several things that require you to involve other people or parties in order for you to perform well or do the right thing. In this journey of investing in real estate, you need to have people around you who will work closely with you to ensure that you achieve your ultimate goal which is definitely making the right and informed choice as far as real estate investment is concerned. For instance, you will need professionals like a lawyer, a broker, an accountant, and even someone like your friend who has knowledge in matters to do with real estate to advise you properly. These said people have to be qualified or have immense knowledge in this field. If you work with those who have less or no ideas concerning investment properties then you will definitely jeopardize your whole investment. In this time and era, some buyers or investors still want it to be a one-man show. They still want to work alone with the intention of wanting to cut down costs or they just believe in themselves too much. They think that they know it all. These investors might have done a successful deal before and therefore they tend to think that everything will happen smoothly as usual but they get shocked when things completely go in the opposite direction.
You should utilize the availability of experts who can help you finalize everything with ease. Apart from a broker, a lawyer, and an accountant, you should also involve a home inspector and an insurance representative. Everything will be set because a home inspector will help you with checking the property. This checking will enable you to know where repairs are required after checking, the home inspector will give you a detailed report about the house or property you are about to buy. You will not have to worry about how you will go up and down checking every corner of the house to ascertain the level of damages or replacements required because the home inspector will have it seamlessly done for you. You will know all the flaws and shortcomings of the property in good time and you will have the opportunity to think about how they will be sorted or if you will back out of that investment deal and look for another one elsewhere. On the other hand, an insurance representative will keep you up to date with matters to do with the insurance of your property. They will also advise you more regarding the insurance of the previous owner. All these services are not free of charge and therefore you will have to equip yourself with good money in order to be served better.
Good stuff and money go hand in hand. Paying service fees to these kinds of professionals in order to acquire the best is something nice and no one should despise it just because they feel that making such payments is unnecessary. If you want to purchase or invest in the best property ever then don’t try to do everything on your own. Try as much as you can to involve other people and professionals so that all the processes can run in a very streamlined and orderly manner. One important thing that you should remember is to make sure the people you work with are true and experienced professionals and not just professionals for the sake of it.
Investing without a clear plan or strategy
It is always the right thing to do everything with a plan and not just any plan but a clear and fruitful plan because as it is said, failing to plan is planning to fail. No one wants to fail but when it comes to planning, only a few take that route. You may wonder why it is so but it is simply because people want things to just happen all of a sudden without going through steps that can at times be tedious and long. When it comes to investing in Canadian Real Estate, people still get into the investment without having concrete and convincing plan or strategy. They venture into the business right from the word go without even thinking for a second. Investing without a plan can happen when an investor dives into investing without conducting some research to be sure of what they should do. This can be considered careless investing and can have serious repercussions on your investment. In most cases, it happens with new investors who are making an entry into the business for the first time.
Doing something for the first time can be a bit challenging and that’s why the new investors have no choice but to make this kind of mistake. When you are about to invest in real estate, your plan should be guided by very fundamental questions that will help you make an informed choice. You should yourself whether the property is located near or in a commercial neighborhood that is more likely to be very busy. If you find out that it is within such an environment then that is the real deal for you and you will see the benefits of it for yourself. You also need to find out what changes have taken place in that neighborhood and what the plans by the management are. This will help you to know if you should purchase a property within that locality or not. You can also analyze what kind of replacements are supposed to be done in that house so that you can fully plan yourself to replace the items that need to be replaced. This will indeed be a good way of putting a plan in place.
The last thing that should now cross your mind is why that house or property is being sold. You should find a concrete answer to this question. Make sure that you are satisfied with the reason why that property is being sold and that you are ready to accept it the way it is. So plan yourself in advance to avoid many complications here and there in the line of investing in real estate. One of the important things when buying a house or property is knowing how this particular house or property will generate income. Knowing this depends on the plan you have so if you happen to have no plan, you are likely to buy a house without knowing how it will generate income. You have to get the mathematics right. Also knowing the exact type of house you are looking forward to purchasing is part of the plan. You cannot just get into the market without knowing what you want. That will be so funny. If you know what type of house you want it will be even easier for you to find one and purchase it without wasting time. Please take note of that.
Buying in an unworthy neighborhood
Another thing that people get wrong most of the time about investing in Canadian Real Estate is buying property in a bad neighborhood. The type of neighborhood in which you buy your property really matters a lot. Buying in a bad neighborhood will of course have a negative impact on the rental income, resale value, and also vacancy rates. A bad neighborhood can mean a lot of things. It can be a neighborhood that is not generally liked or one which is not safe. If you are to invest, then you have to make sure that you invest in a neighborhood that is quite desirable. It should also be safe because security is very important. An Unsafe neighborhood is prone to crimes that sometimes can be very serious to the level of endangering or losing people’s lives. All manners of vandalism can also occur in a place that is unsafe. No one wants to live, work or invest in a neighborhood that is not safe. Security affects almost every sector within a given community and that is why it should be given utmost priority. So before you think of investing you should do a bit of research to ascertain the level of security in a particular neighborhood.
You should check the crime statistics of that area before you can make a judgment and finally arrive at your decision. Another thing that you should check before investing is the availability of schools, health facilities, and other necessities like water and the level of sanitation. A neighborhood that has good and enough schools can be a perfect target for many people. Those wishing to live somewhere new will quickly come to such an area because education is very fundamental, and therefore many parents will admire areas where their children can go to schools with ease and acquire the best education. When it comes to health matters, a neighborhood that has proper health mechanisms or facilities in place will most likely attract even more investors and those wishing to start new lives somewhere different. You can also not overlook aspects like water availability and sanitation when searching for a perfect neighborhood for your investment. A clean environment that has water will always stand out from the rest. Water is life therefore one wants to struggle in order to get water. It is also said cleanliness is next to godliness and a clean neighborhood is the best deal for anyone who values cleanliness. A clean neighborhood will always be a notch higher compared to other neighborhoods that have a compromised cleanliness level. All those factors combined are what will directly affect rental income, resale value, and vacancy rates. If those factors will be right and healthy, the rental income will tremendously increase because many people with show interest in the rental spaces and will eventually move in.
The resale value will be high at the time you will want to sell your property because of the level of the neighborhood is what will make it so. The vacancies will also be low because most or all of the rental spaces will be occupied because no one wants to move out and also the demand for the spaces is high. If you put all those into consideration then you will not make the mistake of buying property in a bad neighborhood. If you wish to be among the investors in Canadian Real Estate don’t let this be a problem that will affect you as well. Try your level best to ensure that you land an investment deal in the best neighborhood where profits will stream in at a very reasonable rate and you will surely appreciate it.
Paying a lot in fees/expenses
This is another mistake that investors keep on doing over and over. They invest in properties that have very high fees and it is really a heavy burden that they choose to carry. There are several fees associated with investment property such as broker fees, and closing costs among other types of expenses. Investors blindly choose to invest in property that has very high fees for the brokers, which is something that is undesirable. High closing costs are always there staring at them just in case they make this poor decision of investing in a property with high fees.
It is always advisable that before investing, you should look for a property that has low or affordable broker fees and closing costs. This will make it easy for you to purchase the property and be in the world of investment right away. An investor can also pay much when it comes to repairs to the property. This usually happens when the investor has underestimated the cost of repairs. When an investor overlooks the cost of repairs, they are likely to spend a lot of money doing the repairs if in the real sense the cost is high than what the investor thought it was. The investor will feel the pinch if they have less money in store for repairs. They will only feel at ease if they have a lot of money put aside for repairs. Despite feeling at ease, this will be a loss to the investor because in most cases they will have to even cater to what they didn’t plan for.
Before you buy any property you should first be sure about the real cost of all the repairs and renovations. This is where the help of professionals in the real estate industry comes in. You can engage professionals, such as contractors and home inspectors. In case you are not sure about the costs, you can involve them so that they can give you the exact estimate of the cost of repairs. If you are sure of the cost of repairs you can be able to decide whether you will be able to buy the property or not. There are also other forms of expenses that will be staring at you the moment you buy a particular house. For instance, there are costs associated with yard upkeep. You have to pay these costs so that your yard can be taken good care of. There are also costs for ensuring that all the appliances in the house are working properly for example the washer, refrigerator, oven, furnace, and dryer. All these need to be maintained so that people can enjoy themselves while in the house and there is a cost associated with that. Nothing really comes or happens for free. There is also the likelihood of experiencing other costs like the installation costs in the instances where you want to install new doors, windows, and roofs. The last thing that you should not forget is the property taxes. If you take this into account and ensure that you get a house that has lower fees, things could be much easier on your side compared to if you would go for the expensive ones. You are your own financial manager and so you should go for something that does not hurt your pocket so much. Don’t be fooled by anyone to invest where you will experience more than high expenses.
In a nutshell, the above-mentioned things are where many people get it wrong whenever they think of trying a hand in the Canadian Real Estate market. Some of them learn from their mistakes and rectify them while some keep on being in the darkness as far as investing in Real Estate is concerned. All these problems ranging from overpaying for a property, paying a lot in fees, to buying in a bad neighborhood just to name a few, can mess you a big time if you are not very careful with what you are doing as far as investment properties are concerned. An article like this one comes in handy for those who still make such mistakes so that they can see the light and take the right route in their real estate investments.
Don’t be among those who get it wrong. If you had doubts as to whether you know what should be done during investing or not, then take this as a lesson and you will never be in the category of those who don’t make the right moves or decisions. If you are not so sure about anything don’t hesitate to seek help from professionals in the field of real estate and everything will never be the same again. Stand tall and be counted among the most real investors in the Canadian Real Estate market. This will only happen if you try your level best to avoid the mistakes mentioned. Also, remember these are just the top things gotten wrong but there are a lot more. There are other several things that some investors keep getting wrong from time to time. The earlier they realize their mistakes the better. Investing in a real estate property is indeed a real hustle because it involves a lot and if anything goes completely wrong then there might be a big problem in waiting.