25 Sep Investment Properties for Capital Appreciation
Purchasing an investment property is an excellent way to diversify your investment portfolio. Real estate offers several advantages over other types of investment vehicles. These include the potential for appreciation, income growth, leveraging options once you accrue equity, and ways to improve the property that can enhance value.
Let’s explore real estate investing 101:
Generally, when assessing the value of a property we want to look at its ability to generate income and offset expenses. Beyond servicing the mortgage, we need to consider the operating costs for the property. These may include property taxes, maintenance fees and utilities not covered by the tenant. In the best case scenario, the rent will cover costs and also provide positive cash flow. Working out the Net Operating Income is one of the aspects that we will need to calculate to better assess the value of a given property.
It is important to remember that Real Estate Investing is a marathon, not a sprint. It is generally recommended to hold your investment for a minimum of ten years to allow for a favourable return on investment. Before you add an investment property to your portfolio ensure you can hold onto the property for the long term, and ride out fluctuations in the market in the event of a change in market conditions.
Take the time to research the area you are considering investing in. Choose an area of growth both in industrial expansion and job opportunities. Cities that are in a growth mode will offer an active tenant pool. Having several tenants in need of good reliable housing will help to minimize vacancies.
In the GTA, the strongest element tied to area values for rentals is the relative location of public transit infrastructure (bus, rail, subway, streetcar, etc.). As transit infrastructure expands, so to do the values of the surrounding properties near them. When choosing which neighbourhood you will invest in, be sure to review the city plans for public transportation expansion – following the expansion routes is an excellent way to predict future value increases in the property market. This is where you want to be!
Beyond these points, we offer a comprehensive approach to sourcing, valuing, and populating your income property.
For additional information on purchasing an investment property, please contact the Shirriff Wells team. Shirriff Wells will discuss your current needs and review opportunities with you that align with your real estate goals. We look forward connecting with you today!