Real Estate Plan
and what is right for you!
Real estate offers a number of options to expand your portfolio beyond your own home. Acquiring a second home, a vacation property, condos in the city, or a second house with several rental units are common choices. The key to your strategy is knowing yourself, and what is right for you.
Tailor Your Strategy To Meet Your Life Plans
The beauty of your investment in your home is that it serves the dual purpose of providing shelter and a profitable investment. Investing in real estate outside of your home can provide the same kind of synergy if you take your life plans into account.
For example, if you chose to buy a second home to rent out, why not buy the home in a region where you wouldn't mind retiring? If you are buying a building with rental units, why not move your home office to that building as well? If you have children approaching university age, why not save the residence fees and buy them a house, which can then be used to rent to other students when they graduate? Any of these approaches will multiply the benefits of your investment.
Tailor Your Strategy According To Your Abilities
Unless you are speculating on land in some far off region, real estate is rarely a hands-off affair. As you expand your portfolio, your responsibilities will grow as well. Your strategy, therefore, should be built around activities you are comfortable with. Questions to consider are:
Are you a born renovator?
If you're handy with tools, and enjoyed building your back deck last summer, you can save thousands of dollars on renovation costs, and get some satisfaction from the process as well. But don't kid yourself - renovation is hard work, and takes a certain degree of perseverance. Poorly done renos won't cut it when you have to face the market.
If you are not a hands-on type, you can hire others to take on these tasks. Don't forget that trades people need to be managed - if this isn't for you, make sure you work with a contractor who will take on this responsibility.
How do you feel about being a landlord?
One of the key responsibilities of being a property owner is dealing with tenants. Usually things go smoothly, but you have to be prepared for the occasional confrontation. In Canada, tenants have considerable rights, so you need to be aware of these as well.
A smart way to determine your tolerance level is to do a test drive. Next time you go for a holiday, rent out your home. How do you feel about this relationship? If you're comfortable with it, the next step might be to rent out a room in your home - maybe a basement apartment. If you find you are able to manage this, you are on your way.
How are your sales and negotiation skills?
In real estate, you have to be a bit of a salesperson, and a bit of a negotiator. Some people love it, and others are not too keen. Don't worry about how good you think you are - just focus on what you like to do. How do you feel about networking with people in order to get information about neighborhoods? How do you feel about presenting your home to prospective buyers? How do you feel about negotiating with a buyer, a tenant, or a contractor?
If you're not naturally inclined towards these activities, you'll need someone on your team that is. There are lots of agents with these skills who can work with you. Chose your agent carefully to make sure you have somebody you can trust.