An investor with free capital has many investment strategies to choose from, each of those strategies has advantages and disadvantages. The choice of domain to invest in depends on the temperament, knowledge and risk tolerance of each individual. After all, every strategy can pay well, just master it perfectly and you can make a lot of money by investing in the stock market or even winning the lottery! However, real estate assets in your investment portfolio provide a secure and solid foundation for long-term financial prosperity, as they tend to be less risky.
Housing has always been and will remain forever one of the priorities and concerns of every individual, as it is an essential need of the human being. Trends suggest that the growth of global demography will create high real estate market demand thus causing it to expand.
It is worth noting that the world’s largest fortunes still have a large portion of real estate assets in their portfolios and they continue to invest in it, as they know that in the long term the return on real estate investments is consistent, positive and constant. Such investments are generally considered to have “safe and stable value”.
In real estate investment the ability to use the financial instrument known as leverage combined with multi-level returns offers you an incredible opportunity to maximize your profits. While the leverage allows you to acquire a property of a significant value with little cash (for example: 10% down payment to finance a $ 500,000 property), multi-level performance, makes boost your investment by monthly rent income, by the gradual repayment of the capital portion of your loan and by the gain in value of the building itself.
Your involvement in the process of control and management of real estate assets is rather flexible and is limited only by your personal preferences, your availability and your technical skills. Indeed, you can delegate full control of your assets to specialized agencies, sharing profits and paying additional fees for their services, or you can decide to get involved in management directly, avoiding additional expenses on maintenance and management to maximize your profit.
The long-term real estate investment strategy yields significant gains over a long period of time, which not only ensures financial independence during working age, but also income security and financial prosperity in retirement. It is commonly accepted that this kind of investment complements, if not completely replaces, basic retirement funds and allows you to take full advantage of income generated and realize your dearest dreams.
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When available funds don’t yet allow you to embark on large scale commercial and industrial real estate investment projects, you can start with the residential. There are 3 types of residential real estate investment opportunities corresponding to the 3 levels of financial stability.
When your budget does not exceed $ 350,000 and you do not plan to invest in maintenance, purchasing a condo would be a good investment. It is a balanced compromise between the affordable market price, relative ease of management and medium risk of encountering troubled tenants.
This type of investment requires rather significant funds availability. However, it promises assets value increase in the long-term and a rental clientele with a good level of income, which reduces the level of potential risk associated with property management.
Requiring significant financial contributions, both at the purchase and during its operation, this type of investment requires significant efforts in day-to-day management. In return, if well managed, it will generate a stable cash flow and will be profitable in the long term thanks to the increasing value of the assets.
Several websites and blogs offer you additional information on real estate investments and you can spend countless hours and hours trying to grasp tens of thousands of pages of information. However, as an investor, you need to be aware that time is money, so getting in touch with a real estate professional to quickly get answers to essential questions about your project means optimizing your expenses, and therefore, maximize your profit.
Location of the building. As a rule of thumb, a well-located building will generate income, on the contrary, even a new building with a lot of attractive points may not capture tenants’ interest.
Use the strategy of “Flipping” (purchase-resale). When used properly, this strategy can serve as a catalyst to generating significant incomes in the short and medium term (read more about “Flipping”)
Opportunity to make group investments. By inviting potential collaborators, it is common to share project-specific risks and to have greater financial freedom to engage in more lucrative projects.
Make accurate calculations at all stages of the project to avoid costly mistakes (take into account all aspects of financial management of the project and be well aware of the expenses and operational costs)
Have a trusted partner (real estate broker) and be well informed to minimize the risks of failure.
Now that you have some understanding of the subject, you may begin to see that the field of real estate investments is no child’s play and requires meticulous planning and preparation. Unless you are an experienced real estate investor, you will need help at many stages of your first investment project. Please do not hesitate to contact me so that we can assess the feasibility of your investment project and choose together a better strategy to optimize expenses and maximize your profits. To begin discussing your investment project with me, you will only have to decide on the geographical area you are most interested in. By the way, did you know that in Montreal multiplexes have appreciated between 3 and 14% in 2018? I’m waiting for your call to tell you more.
