When it comes to the Toronto real estate property investment market, the model for determining value rests not only on whether it's a beautiful house or not, but on a number of different variables that affect both cost and outcome. This isn't as simple as being able to ballpark an income stream based on purchase price point to determine your return on investment. It's much more complex, where variables such as size, condition and location - plus those that affect risk profile like unit number, size and mix - including how long any existing tenants you assume have been occupying the dwelling, including those whose rents are protected by rent controls - which ultimately determines your investment success.
Just like you would make a business plan for a new retail or service company, when you buy a real estate investment you should cover these five essential considerations:
1. Define your goals: A prudent owner should define what their Toronto real estate investment goal is - including how long they intend to own the property. The difference between a 5 year holding period and a 25 year holding period could change your criteria.
2. Be Realistic: Real estate investments are diverse and, depending on how much time you are committed to maintaining your investment can make a big difference to its future value, in addition to the entire experience of owning one.
3. Find good partners: From your realtor, lawyer, accountant, contractor and lender, spend time finding the right professionals to assist you in locating, analyzing, negotiating, financing, maintaining and protecting the purchase of your investment. Your team of Toronto real estate professionals should be viewed as assets rather than pesky expenses.
4. Test your assumptions: If you don’t let your team - and their knowledge - help you attain your goals because you think you 'know best', you could be missing an opportunity. Sometimes a simple incorrect assumption can lead to less than satisfactory outcomes. No question is a dumb question with regards real estate investments.
5. Don’t panic: When you’re properly prepared the process will not only be financially rewarding—it can be enjoyable and fun. Calm expedience wins the day almost every time.
Also whittling down potential profits are some oft overlooked costs, especially by investors who do not intend to occupy any portion of the property. In the Toronto real estate market, investors are paying hefty closing costs. Here's one of our informative posts called "Dear Urbaneer: What Are The Closing Costs For A Property Purchase" that will help you summarize your expenses.
So what does your investment portfolio look like? If you're considering purchasing or selling a property investment and need straight-forward guidance on the myriad of mitigating factors which will help you make the right choice, we at urbaneer have over two decades of experience - as both realtors and investors - that can lend you an important perspective. Here's our Tales Of Upper Hillsborough which shares our own journey into the income property market, including Tackling The Property Tune-Up which summarized the scope of work identified by our inspector with our own plans, and The Black House Financial Tally where we fess up to the real costs of undertaking the transformation - remotely from Toronto - of a dilapidated forlorn income triplex in Charlottetown, PEI.
Have questions? Please know we’re here to help!
~ the Urbaneer Team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage - (416) 322-8000
- we're here to earn your trust, then your business -
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