Investing in real estate is often touted as one of the smartest ways to make money. Unlike start-ups that come and go, people will always need new places to live, work, and pursue their passions. But taking the first step in Springfield Spall real estate can be intimidating, especially for those who aren't sure which type of investment is right for them. To make the transition easier, keep these facts in mind.
Renting the Property
Canadians have options when it comes to renting their property. Some choose to rent homes, duplexes, or apartment units to families, individual, and couples. Others choose to rent office space to the aspiring business owners of the area. Rental laws vary base on the province the property is located in and the type of real estate an investor buys. For example, a small apartment complex is typically considered a residential property, while a larger apartment complex will fall under the commercial category. The definition (and corresponding laws) will vary per province based on the number of units in the complex.
Flipping the Property
Flips take run-down properties and modernize them. This can be done by an experienced DIY handy person or with the help of professional contractors. The advantages of flipping can be extremely attractive to investors because buyers are willing to pay a premium for a property that's move-in ready. But flippers need to do their research before they purchase properties. Some areas have intense building regulations or permit laws. These factors can delay construction and reduce an investor's profit margin.
Investing in a Trust
Flipping and renting properties take a lot of effort on an investor's part. They either have to manage a crew of helpers or take on the work themselves. They're great options for those who have the time to devote to a project, but an unrealistic choice for busy professionals with outside jobs and families.
A real estate investment trust (REIT) is like a mutual fund but for real estate. An investor buys small portions of different properties while outside groups manage the property behind the scenes. The rewards aren't as dramatic as renting or flipping properties, but the risks aren't as pronounced either.
Investors who choose a REIT will want to carefully consider their options before choosing a company. The REIT should be transparent about how the company is performing and give the investors some say over what happens to it (e.g., major repairs, policy changes, etc.).
Buying Vacant Land
Most investors will buy vacant land and keep it 'as-is' until a developer offers to purchase it for more than the original price. Like a REIT, vacant land doesn't require a lot of effort on the part of the investor. However, vacant land also comes with its fair share of risks:
- Taxes: Investors still have to pay property taxes on their land as they wait for a developer to make an offer.
- Maintenance: Vacant land can turn into a dumping ground for the neighboring area. Investors may still have to pay to have junk removed or to keep people off the property.
- Zoning laws: Not all land is zoned for building. Investors need to triple check that their land will be viable (and desirable) to a developer.
Learning the different types of real estate available is a strong jumping off point for a new investor. Each option has proved to be profitable for Canadians all over the country. What each investor chooses depends on their priorities and the time they're willing to devote.