Real estate investments can be a great source of income as well as a solid way to diversify your assets. For the past few years, Canada’s real estate market has been booming and promising great returns. However, real estate investment requires careful research and planning. You need to get a good understanding of mortgages, loans, interest rates, tenant laws and other factors that can affect your in real estate investment in Calgary.
There are several ways to invest in Canadian real estate, and each approach has its own level of risks and returns. So, due diligence is necessary to make a sound investment decision. According to experts at our rental property management company, the best ways to own Canadian real estate investments are:
Investment in principal residence
This is probably the most common and important method of investing in Calgary’s real estate. When you purchase your principal residence you don’t just buy a place to live in, you also make a long-term investment because over the time, your wealth grows.
Moreover, you are allowed tax exemption from the profits that you earn from selling your principal residence. This exemption can prove very helpful from the point of view of real estate investment. When you sell any property, you have to pay capital gains tax on half the profit you have made from selling the property. However, this is not the case when you sell your principal residence.
1. Investing in Rental Property in Calgary
Buy and hold is a time-tested strategy used by landlords and in Calgary’s real estate market. Purchasing a residential property and renting it out is a great way to generate income from your real estate. You can buy a single-family home and rent it out to a family, or you can buy a multi-family home and rent out a part of it. If you have another principal residence, you can rent out all units of your multi-family home.
The rental income can cover the mortgage cost and you can earn profits as well. Over the years, depending on how long you hold the property, the property value can appreciate significantly.
It should be kept in mind that managing rental properties can be very demanding. It is a good idea to seek services of a professional rental property management company that can deal with tenants and look after your property.
Investment in commercial real estate
Investment in commercial real estate such as office buildings or shopping complexes is not very common among individual investors. By investing in commercial real estate, owners can earn significant income through rent. In fact, earning potential is much higher for a commercial property compared to a residential property.
It must be noted that investment in commercial real estate can require huge capital expenditure and the management can also be quite complex. That’s the reason why few individuals prefer to invest in commercial real estate.
2. Investing in Vacation Property
While most of you may consider a vacation home as a place you will buy for pleasure. A place you can visit to relax and rejuvenate. However, a vacation property can be a great investment as well. The idea is to purchase a vacation property in a high-demand area and generate good rental income from it. Again, managing a vacation property can be a demanding task especially if you do not live in the same city. In this case, it is best to trust services of a good rental property management company.
3. Flipping Properties
Flipping houses involves purchasing a property, renovating it, and then selling it at a higher price for a profit. Basically, property flippers buy homes that most buyers are not willing or able to renovate. They improve these properties to the point where people will be ready to buy them.
Investors in this trade mostly make profits by buying under valued real estate, increase value of these properties by property updates and additions and reselling the property in short time to unlock the value. The profits on these flipped properties can be up to 20% – 25% or even higher ROI.
If done right, flipping real estate can help you earn a substantial return over a relatively shorter period of time. It is a great method of real estate investment but involves a lot of work. If you don’t do enough research before you decide to flip a house, you may end up losing a lot of money.
Once you choose a property to flip, you must consult a real estate investment expert or your Calgary realtor to ensure that you will be able to sell the property at the amount you are looking for. You must go ahead only if you are able to sell it at a price where you can recover your repair costs and still earn a handsome profit. If not, the investment is not worthwhile.
Risks in Real Estate Flipping
You can’t just buy any property that needs fixing up. Your best bet would be a property that needs only cosmetic changes and not structural repairs such as roofing or foundation repairs. Also depending on the local Calgary real estate market it can also be quite risky proposition so tread with caution.
If you are looking to invest in real estate in Calgary, it is best to have experienced real estate investment expert or local Calgary realtor guiding you. They will help identify the right properties to invest in and make sure you get a good deal on them.
LEASEWELL property services is one of the best property management companies in Calgary. We help landlords with property management of their rental property in Calgary more profitably and hassle free way. Let us help you market your rental property to match with great tenants and keep your rental in top shape to maximize return on your rental property investment. For more please visit our website www.leasewell.ca or contact us at email@example.com