Real estate is about more than just houses. Most fortunes are built in Real Estate and its never too late to start investing in real estate. This is a great time to buy and invest in real estate. Consider multiple sources for buying properties. New investors assume they can only purchase homes through the local MLS and knocking on doors in distressed or up and coming neighborhoods. Sometimes you can find great deals by networking with real estate investors, hard money lenders, mortgage brokers and agents. Stay tuned for my first real estate investor event. Coming Soon.+
Many investors already own their own homes or are paying off mortgages, so they have a sizeable portion of their overall net worth tied to a hard asset. But there are several other ways to invest in real estate including secondary properties, real estate income trusts and alternatives such as real estate limited partnerships. The key thing to remember is that no one asset type should take up more than 50% of an investor’s portfolio, but how you get to that level can be dramatically different from person to person.
Many people raise the question of whether residential property, be it a primary residence, second home or vacation place, is actually an investment. Some, like David Kaufman, CEO of Toronto-based Westcourt Capital Corp., simply don’t see homes as investment options. “A lot of people treat their primary residence as an investment, but they aren’t in a traditional way,” Kaufman says. “One of the things people forget is that if you live in an appreciating area, unless you are willing to exit the market and move to some other area, it is hard to make money on it.”
Kaufman adds many think they’ll always make money off their properties because of the leverage involved and the long-term growth of real estate prices in recent years. “They think real estate will always go up in value ahead of inflation, but that assumption must be fallacious at some point,” he says. “The music has to stop when there’s no real estate affordable for people to live in.”
Buyers must look at more than current real estate values and investigate other issues such as job growth in the region, GDP growth and economic development to determine whether those factors will positively impact prices. “If you are going to buy, buy where job growth and GDP growth is,” “Don’t buy cheap, but where long-term demand is good.”
Some pundits claim personal real estate isn’t a very liquid investment, and is limiting for those who may need access to capital. Campbell disagrees. “If you need to sell a piece of property, you can,“ he says. “But if you want to squeeze the last nickel out of it, it might appear illiquid. Canadians have this incredible emotional attachment to property. But once you get by that and recognize you can pay someone 7% for looking after the place and that there aren’t that many issues that come up anyway, then you can put it in your portfolio like your other investments.“
Stay tuned for my first real estate investor event. Coming Soon.+