Real estate investing does not need to be complicated. If you just follow these four basic rules, you can become financially secure.
- You need to own your principal residence as soon as possible. It is almost impossible to ‘time’ the market but the longer you own, the more your property will appreciate. It is exactly the same theory as investing for your retirement, the sooner you start, the more your money will compound and grow over time. If you cannot afford to carry the property you want, rent out a portion of the property or take on a roommate to help with the mortgage. One of our agents owns a two bedroom condo and has a roommate that pays rent. It’s easy.
- Never buy a rental property that does not have ‘positive’ cash flow. If you have to feed the fire every month, you will end up having to sell it at the wrong time (when you are forced to and not when the market is best for you). Hence never buy land!
- Only buy in markets where the population is growing and will continue to grow. There is a reason why some markets have cheap properties – people are leaving town!!
- The best time to buy or trade ‘up’ is when the market is falling. Occasionally real estate will dip for a year or two. When that happens, higher priced properties tend to drop more than lower priced ones. The price gap between what you own and what you want to buy narrows. Hence it is much easier to trade up and there won’t be as much competition either.
Why you need to own real estate? Because the only way you can retire in this Country is to have a Government Pension or own real estate! You can never save enough in RRSP’s. Just do the math!