How to Make Money From Canadian Real Estate InvestmentsAug 22, 2023
Investors often talk about portfolio diversification, which is a more professional saying than the more colloquial “don’t put all your eggs in one basket.”
Essentially, portfolio diversification is about reducing risk by allocating capital across a wide range of asset types. Implemented effectively, this strategy can accelerate returns on investment and minimize capital costs.
Most investment portfolios include the most common asset classes, including:
- Cash savings
- Mutual funds
One particular asset class that is often overlooked by new investors is real estate. You can earn massive amounts of money through real estate investments in a number of ways. In addition to the profit potential, real estate helps diversify your investment portfolio so that you’re not at the mercy of other investors.
Why is Canadian real estate investment so valuable?
Real estate investing in Canada is when you purchase, lease, rent, or sell properties to make a profit. You can purchase properties below market value, fix them up, and then resell them to make a return on your investment.
Unlike other asset classes, real estate will always have potential buyers or renters. Simply put, people need homes. An investor with properties has leverage to make serious money in exchange for access to their property.
How to invest in the right market across Canada
Canada is a large and diverse country with plenty of open land. However, very little of the land is inhabited by Canadian citizens. With a population approaching 40 million people, 90% of Canadians live within 160 km of the US border.
Why is this data important for your real estate investment plans? It goes to the age-old paradigm of economics. Invest where there’s demand, so that supply can grow and you can make money from the supply.
Use government resources to analyze population migration across the country. Since 90% of Canadians live within a four to five hour drive of the border, don’t expect massive returns on property in the far north.
Instead, look at the data and identify where population growth is at its strongest. Cities with fast-growing populations have the market demand for prime real estate. Getting your feet on the ground, so to speak, with the right investments can help you ride the migration wave and reap massive returns.
Have the right real estate investment mindset
Like with many things in life, the real battle begins on the mental battleground. Successful real estate investors have the confidence to make smart investments that pay huge dividends in return.
If you’re new to real estate investing, it’s natural to feel a little intimidated and overwhelmed by the prospect of expanding your portfolio. Shifting your mindset means learning to let go of those fears and trepidations because they’re only going to hold you back.
Learn to create the right mindset that embraces the potential for financial freedom. Understand real estate theory, and learn how to apply those concepts towards the action of purchasing properties. When you have the right mindset, coupled with insightful knowledge, you can motivate yourself to take action and grow!
Best ways to invest in real estate across Canada
You’ve done your research into the markets with the highest potential. You’ve learned how to create a winning real estate investment mindset. Now, it’s time to determine the best ways that you can invest in real estate across Canada and grow your own wealth.
Here are four of the best ways to enter the real estate investment market and get the most bang for your buck.
- Buy and flip
Purchasing and flipping properties is one of the most popular real estate investment strategies. It involves making a sizable short-term investment in a property with the expectation of reselling the property in a short period of time at a higher price.
The most common tactic to execute this strategy is by acquiring a fixer-upper. These properties have aesthetic issues like chipped paint, loose doorknobs, or damaged exteriors that reduce the overall value of the property. Most of these aesthetic issues are very inexpensive to repair, which means you don’t need to spend much more than the money used to acquire the property.
You can also keep an eye open for foreclosed or auctioned properties, which are frequently listed at below market value prices. Acquire foreclosed properties and complete the repairs to make them viable on the market again. Once you’re ready to sell, you can earn back all the money you invested and make a handsome profit for your hard work.
- Acquire a rental or vacation property
Short-term rental services like Airbnb changed how Canadians think about investing in property. Owning property near major tourist attractions is a great way to pay off a mortgage with other people’s money. Travelling tourists are a great asset to help you pay for your vacation home.
Canada has no shortage of natural wonders that attract thousands of tourists every year. Many people don’t want to use traditional hotels. They like having more on the ground experiences in new markets, and a short-term vacation property is a travelling tourist’s favourite choice.
If you’re worried about carrying an additional mortgage, remember that tourists who come to rent the property will help finance the cost of the property. Just make sure you keep the property clean and in pristine working condition so that the tourist reviews remain positive.
- Invest in multifamily properties
Multifamily property investing is one of the wisest real estate investment decisions. Multifamily properties are the apartment buildings, the condo towers, or any property with five units or greater.
The greatest advantage to multifamily property investments is that it minimizes risk while increasing cash flow. Since you’re renting units to dozens or hundreds of tenants at a time, the money you invested into the property is paid back with regular monthly payments. If one tenant falls behind on their rent, it’s not going to hurt your financial situation. You can take the time to sort the issue out or find a new tenant who can be more reliable.
You can learn tips to make multifamily investing a winning strategy and make the most from your investments. Transform your investment into a reliable stream of passive income so that you can grow your personal fortune and expand your real estate empire.
- Consider commercial property investments
Finally, commercial real estate is another profitable avenue worth exploring. Commercial real estate is rental properties that are leased to corporate businesses that include offices, industrial complexes, malls, grocery stores, and shopping centres.
As you can imagine, these are much larger properties that require multimillion dollar upfront investments. If you do consider commercial property investments, it’s wise to collaborate with a team of like-minded professionals. Pool together your capital so that the cost is not yours to bear alone.
Having multiple parties involved in a commercial property investment will also make it easier to qualify for financing. Once you’ve secured the money, you can complete the purchase and turn that money into even greater stacks of money in return.
Join the leading real estate investing community
As we’ve made clear, there are multiple ways to make money from real estate investing across Canada. You just need the right mindset and the inside knowledge to make strategic investments that pay capital returns.
Make your journey into the world of real estate investment easier with a helpful hand. Join the nation’s leading real estate investment community to accelerate your IQ and grow your investments. Success is closer than you think!
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