Are you thinking about dipping your toes into the world of real estate investing? In today’s blog, I’ll guide you through everything you need to prepare before diving into the market. Let’s get started!
Why Invest in Real Estate
More than a century ago, Andrew Carnegie stated that “90% of all millionaires get to that level of wealth through an investment in real estate.” This statement remains true even today. Real estate investing offers numerous benefits, such as cash flow, tax breaks, appreciation, and leveraging debt. If you’re interested in learning more about these advantages, check out episode 59 of my podcast with Michael Hernick, where we discuss how real estate can help you achieve financial independence.
Ready to buy your first rental property? Here are the five essential steps to follow:
- Money/Financing: In Canada, the minimum down payment for a rental property is 20%. This can come from your personal savings, a gifted down payment, or contributions from co-investors. During this stage, it’s crucial to obtain a pre-approval from a mortgage broker. Be prepared with your employment letter, most recent paystub, and a 90-day history of your down payment for a smooth process.
- Choose Your Market: After securing financing, decide where you want to invest. The best place to start is where you currently live, as you’ll be familiar with the area and its rental demand. Consider factors such as proximity to amenities, jobs, education, green spaces, groceries, and shopping, as well as neighborhood demographics and future developments.
- Property Type: Determine which type of property suits your investment goals best, whether it’s a single-family house, condo, or townhouse. Each option has its pros and cons, so weigh them carefully before making a decision.
- Assemble Your Professional Team: To successfully purchase a rental property, you’ll need a team of experts, including a mortgage broker, realtor, insurance agent, home inspector, property manager, lawyer, and accountant. Each professional plays a vital role in the process and can help you navigate the world of real estate investing.
- Crunch the Numbers: Analyze your potential expenses and profit makers to ensure your investment property generates positive cash flow. Common expenses include mortgage payments, property taxes, home insurance, utilities, condo fees, maintenance, capital expenditures, vacancy, and marketing costs. Potential profit makers may include room/suite rent, garage space rent, and laundry income.
Finally, commit to the process! Connect with a trustworthy mortgage broker, engage with a knowledgeable realtor, analyze properties, and make offers. The first property might be the most challenging to acquire, but once you’ve accomplished that, you’re well on your way.
If you’ve already taken these steps but haven’t found a reliable mortgage broker, feel free to fill out my application in the description. I’d be more than happy to guide you through the financing steps.
For more information like this, subscribe to the Saskatchewan Real Estate Podcast, where we release new episodes every Monday.
Looking to get started on your mortgage journey? Start with a mortgage consultation! https://calendly.com/ronqmortgage/15min