Need advice on investment into real estate

[Tatyana]

Hi everyone,



It is a great website, and an amazing opportunity to ask questions and get an answer from professionals!

I am absolutely new to investing in real estate, but it is better late than never..

We are a young couple with a child, own a 2 bedroom condo in Toronto. I work full time, 9-5, my husband is a very new realtor.We have about 80 000 CAD and thinking of investing into real estate. What do you think our best options:

1. Sell our condo ( = 265 000), buy a house in Toronto, live in and rent out basement

2. Buy a house and rent it out. If that's the case, which area would you recommend? New Market, Toronto, Scarb-ro, other provinces..

3. Buy a cheaper house, rent it out and invest the rest of money into condo building and sell the assignment.



Please advise. Any feedback is more than welcome.



Tatyana

 

[Thomas Beyer]

Chances are that prices will go sideways or down in GTA for the next few years. No rush to do anything hasty. Sell the condo if you get a decent price. Keep a reserve as your husband's income will be uncertain. Buying a house and renting a portion of it is probably a far better idea than keeping a condo. < br>
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Renting is an option to consider in a flat to down market. If you have cash, know a sub-market really really well so you can position yourself to get a real good price on a house, but you have to be patient, yet act fast for the right opportunity. < br>
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Real estate is not a market anymore make a quick buck, fast. You have to take a long view .. 5+ years, better 10. Educate yourself. Research a market you like to live in, with upside, really really well so you know what a great deal, an average deal or a poor deal looks like. That takes a while to discern. But since you have to live somewhere anyway, might as well live in a good investment with partial subsidies from a basement suite.

 

[MaximeValmont]

Well , first of all, Chances are high that your condo is overvaluated if it's in Toronto. I would look more into that. If it is, sell it.





Now, whether you should buy a house,a condo, etc..Is a hard question. It depends of the market and your knowledge. There is no "good answer". Even if everybody is saying " It's a good time to buy a house right now", it doesn't mean if you buy a house you have 100% chances of uying a good deal. You have to know how to spot a good deal.





I would spend some of that 80 000$ on knowledge. Knowledge is power.





You can put me tomorrow morning in the worst market in the world, and I'm 100% confident that i'll find a way to find a really, REALLY good deal. Maybe i'll have to structure a really complex deal in which i'll have to convince the city to reduce the taxes on the building, And at the same time convince a major corporation take ownership in the building I want to buy, but trust me, i'll find a way.





This confidence comes from knowledge. This is what you truly need, not just money. I started my first company when I was 19 years old with 0$ and two months after I had 10 people working for me. The only thing I had was knowledge. With 80 000$ you can build an empire if you truly know what you are doing.








Also, I noticed you said your husband is a "new realtor". A new realtor often recquires lots of cash before he builds a client base. Just don't forget that.





So basically, IN MY OPINION, You should not invest in anything right now. Read, Read and learn as much as you can. Then the answer to your questions will appear really easy, and that will mean you are ready.








Valmont.

 

[LenderRob]

Every investor has different priorities with regards to both long-term and short-term goals. At the end of the day, for my investments, it always comes back to the numbers.



Have you run some numbers based on the options you've listed above? Each will have advantages and disadvantages. For instance if you were to purchase another home or property in which you would live in, you would qualify for a higher loan to value ratio (5% down perhaps) meaning your upfront capital costs would be significantly reduced. This option could allow you to purchase a new home to move into with a suite, rent out the suite, and re-provision the capital you have saved into a third investment.



Keep your money working for you!




Robert Hein, Director of Mortgage Operations


tel/txt: +1 (604) 807.6842 | web: InvestWiseMortgage.ca

 

[Tatyana]

Thank you so much for your feedback! It is always a treasure to get support from professionals. The prices for houses are ridiculously high in Toronto, so we are considering in buying a property in New Market and rent it out. Does anyone have experience in investing in that area? The prices are still decent there, Go station right there to go downtown, and the houses are being rented out within a couple of weeks. Any ideas?Thanks!

 

[housingrental]

Hi Tatyana



Give a shout to Gary for questions. He has a lot of experience in Newmarket. From others I've been warned to stay away from the "dog patch" but I've never see any investor have difficulty attracting OK tenants in that area either. I personally like the area north of Davis from Main to Yonge.

 

[afshinrein]

All depense: You want short term return or long term?

Short term, then get into Reno/Building and flip. It gives you your return every year. The only challenge is Watch what you buy. And long term, is rental property investment.



Good Luck.

Afshin

 

[samimonir1]

Hi Tatyana, you are at a stage, all of us were at some point. I have few businesses and few investment properties now but 3 years ago I was asking the same question you are now. What worked for me was a simple question I always asked before any business deal I make. "what is the worst case scenario?" and then I just make sure I have a plan for the worst case scenario. For me the worst case scenario was what if I can't rent the property and I am stuck with monthly expenses, mortgage, Taxes etc. My worst case scenario answer came when one of my leased cars came up for a purchase I purchased the car and then I had about $350/mth freed up. Having the confidence now that even if I am unable to rent the property I would be able to pay for it without any added pressure. So I Purchased a condo which had the expenses just above $500. I rented the condo with in 2 weeks and had a cash flow of $300/mth so now I had $650/mth confidence so long story short after that I purchased 3 more properties and now have a cash flow of aprox $1300/ mth. So cover your worst case scenario fear and you'll be ok. Of course remember to do your home work before you purchase anything. We learn to walk first and then run.

 

[Tatyana]

Thank you all again for your feedback! You know when you are just starting out, the information and the options can be overwhelming.. I understand that education is important, so I am reading about different investment opportunities, pluses and minuses. However, the information on the Internet is abundunt; without experience or a person who has been ' boiling' in this environment and gives a personal recommendation is quite challenging to decide what the right option is for you.

I think I will ask quite a common question: How you get started?What was your first move? I understand every personal financial situation is different, however, it would be great to hear some start up experience. Thanks again!

 

[Thomas Beyer]

It took me 5 years from "gee, I should do some real estate,it seems to make sense" to actually get off my rear end, and took a course .. Then it took me almost another 5 years to buy a rental property, a rental pooled condo in1997. Then I bought 2 more condos .. And then a 15 suiter in Edmonton. The rest, as they say, is history.




To learn to swim you take a course, but then you have to jump in the water. In the water you'll get wet,but that's where the learning is happening. Just make sure you don't drown on the first attempt.



In your case it may mean to sell the ondo and buy a house in a growing part of GTA where Mayor Ford may build a subway or streetcar, and perhaps sublet the basement suite. Then in 5 years, or ten, you buy a second property . Perhaps by thenOntario has cleaned up its fiscal mess and will grow again, and likely you will find some great buying opportunity in the next 5-7 years in GTA. GTA houses prices will correct downward for the next few years, and then rise again. Be patient,educate yourself, read blogs, books, join REIN, accumulate cash as that is what is required to buy properties, keep your credit clean, keep expenses low, study growth areas in GTA and be ready to pounce when the opportunity arises.

 

[MaximeValmont]

I always knew I was going to end up in Real Estate.



I started my first business at 19, with 0$. Just a young guy with an Idea. 3 months after I had 10 people working for me and we were making 15 000$ per week in revenus.



I then decided to go to the university of Montreal to do a Bachelor degree of business. I know it seems strange to quit doing what seems to be quite sucessful, but I value highly education. In quebec you need to do 30 classes to get a bachelor, I did about 50. I have specialisations in Real estate, finance, Marketing, Human ressources. Eveything there was to know, I wanted to know it.



My way of thinking is this : The only difference between the richest men in the world and me, is Knowledge.



The only difference between someone that owns 100 units and someone that owns 10 millions, is knowledge. The one with 10 millions units is better at : creating value, raise money, understanding the economy, etc



Just with the websites that i'm running, I would not even need to work for the rest of my life. But I still choose to work in evaluation. Why? I get to know lots of really powerful people in this market. People with net worth of 300 millions+ , Presidents and Vice president of big companies, etc etc. I value contacts big time. I'm also working on something that's going to be huge soon.





I would suggest you do the same. Learn everything you can, and get to know big players.



Lots of people think that money limits their level of success in Real estate. This is pure crap. They are just not creative enough. They are just not good enough at creating value. Know how to create value, And you'll have more money than you have time to allocate it.



Valmont.

 

[GaryMcGowan]

I live in Newmarket and have owned in the area that is known as the dog patch. It has changed a lot over the years and i have made a lot of money there. It is close to shopping and transportation. Newmarket is also at beginning stages of adding a major transportation upgrade. I sold a building there last summer at the height of market. Prices have come down a bit since then. You will not have a shortage of renters. Main floor suites with 3 beds go for 1350 + to 1500+. Basement suites go from 800+ to 975+.

I can put you in contact with a great realtor who happens to own about 12 properties in that area.

 

[GaryMcGowan]

I got started in real estate about 25 years ago but I didn't really know it. My parents had always owned a few properties and my father would drag me out with him. I wish I would of paid more attention then. It was about four years ago my father said "you know the only time I really made money was in real estate". Well I took that to heart and remembered all the times I would visit properties as a kid so I jumped right in. I educated myself and started investing with my father. The key here is I partnered with someone who had been there done that. The experience that he brought to the table and the education is what has allowed me to excell at something that I love doing. Of course all this come with hard work and bumps along the way however it's bumps that really allow us to learn.

 

[housingrental]

Hi Gary

Can you comment more on price softening in Newmarket - any guesses as to why?

This has not been happening in Markham / Richmond Hill / Vaughn etc.. from what I've seen - or I'm I mistaken?

 

[Tatyana]

Thank you for sharing your personal experiences. I believe the main lesson from all your comments is not to be in a rush; do a proper research;educate yourself;and then, the answer will be right there. As for an investment property, we need to concentrate on smaller towns with universities, industry base; research the area, make sure the investment property will be cash flow positive from day 1 with 20% downpayment; be very selective with tenants; know your rights and only then make a decision to make an offer.

I really appreciate everybody's feedback , and good luck in all your endeavours!