What is Real Estate Investment in Canada?
look at the Canadian real estate market and opportunities for investors from within and abroad.
When it comes to investment opportunities in the True North, investing in real estate is one of the safest options for those looking to increase their net worth and invest in properties that will quickly grow in value. For those looking to buy property in Canada, there are plenty of options for making an income by buying land. As an investor, purchasing a rental property or investment home can help you grow your income, while also contributing to the Canadian housing market and economy.
Since the onset of the COVID-19 pandemic, there has been a dramatic increase in people looking to purchase property and move abroad. According to a study conducted by Remitly, "how to move to Canada" was the most searched emigration query in 30 countries out of 101. Part of Canada's appeal is low unemployment rates, lower interest rates and immigration options.
Currently, Canadians are taking advantage of closed borders and the real estate market is seeing an influx of first-time buyers from Canada. However, when the border reopens post-pandemic, the Canadian real estate market will see a heightened number of investors from abroad scooping up real estate investment opportunities.
The best times and places to invest in real estate
Real estate investing is one of the safest, risk-free ways to earn money from investments. Since the housing market in Canada is booming, houses are seeing an increase in appreciation over a short period of time. As an investor, building home equity for financial gains can typically be a long waiting game that could take years, whereas, in Canada, the market is so hot that homes are seeing appreciation in value on a month-to-month basis. For investors, real estate is an opportunity to diversify their investment portfolio while taking advantage of long-term capital gains.
Since the pandemic is still in full swing, low-interest rates are becoming part of the allure to purchasing single-family homes as an investment property, which makes 2021 the best year for investing in real estate. Even if you plan on living in your investment and making it your principal residence, your property will increase in value over time and you'll get a decent return on your investment - especially if you undertake projects that help increase value like finishing a basement or renovating and updating your kitchen.
Although Toronto and Vancouver are some of the most sought-after areas in Canada, other areas are great places to purchase a house
due to their low purchase price and tax-related fees. The Greater Toronto area is one of the best places to purchase as it's close enough to the big city, while also having a lower cost for buying properties.
Aside from Toronto, Halifax, Windsor, Quebec City and Winnipeg are some of the country's more affordable cities to consider buying a property in. These areas may take a bit longer to grow, so there is more risk associated with investing in real estate in these areas, but they also have some of the cheapest homes available in the country, which can help reduce your monthly payment on your mortgage.
Real estate investment opportunities
When it comes to real estate investing, there are many options for which kind of investment opportunity to go with to maximize cash flow. When you're looking to invest in real estate in Canada, you need to consider which kind of investment you're
looking for. Different investments come with different levels of risk, but real estate is one type of investment that is solid throughout time.
If you're choosing to live on your purchased land, you'll see a return on your investment after you sell your home. You'll have to pay your mortgage throughout the tenancy and pay for utilities with your personal funds. You'll see you're gaining equity through keeping your property as a principal residence. When it comes to real estate investing, most don't think that buying their primary residence is an investment, but your home will increase in value over time and you'll see a difference in your purchase price, and what someone else may buy your home for.
Another option for properties is to convert
them into short-term rentals. Having short-term tenants pay to use your home is a great way to increase your cash flow. Canadians are looking for personal escapes, so you're single-family home or new condo could be a great place to escape for a weekend while paying a premium to you as the primary owner. You could make as much as $400 a night. Long-term rental property
Another option for your investment house is to consider making it a rental property. Having tenants pay rent makes it easy for you because they can cover most, if not all of the cost of your monthly mortgage payment, and property tax. When you invest in rental properties, you also assist the housing market by providing rentals. Rental income can iincrease your cash flow, and having rental income allows you to fluff out your own personal financial situation.
Investing in a REIT
An alternative to physically owning a house is
investing in a Real Estate Investment Trust, (REIT). These are great for real estate investing because they put your money into the real estate stock market instead of physical property that you have to maintain. These companies own and operate real estate and allow people to invest in real estate, and gain monthly dividend-based income while helping create a thriving housing economy.
In 2020, REITs took massive hits, but with vaccines on the horizon, investing in a REIT is a good, solid investment for people looking to invest in the stock market, but want stocks that are slated to grow while contributing to the way Canadians live.
The major deterrent for investing in real estate is the financial implications related to caring for your land. Whether it be small issues, or issues requiring a full renovation, you'll be on the hook as a homeowner or a landlord. This is why investing in a REIT is so appealing. For REITs, you don't need to worry about tax-implications, land issues, or mortgage payments since you just buy into the trust. It works similar to investing in the stock market - you put money in, and watch it grow.
Tips for investing in Canadian real estate
When an investor begins to consider buying real estate in Canada, there are many aspects that the buyer must take into consideration as an investor. One of the best things investors looking to invest in real estate can do is contact a realtor or real estate agent. These professionals often have years of experience in the industry and can help determine whether your investment should be your principal residence, a short-term rental, or an opportunity to rev-up your cash flow with rental income
One of the unique challenges that face
homeowners and investors in real estate is that when you buy a home or property, you also buy all the liabilities that come with it. If someone gets injured on your property, you're the one responsible and you may face legal action. This is another case that is especially prominent with rental properties.