Team Joe & Nina Asensio
circle_1 circle_2 circle_3 circle_4

Blog

Investment Properties 101: How Real Estate Can be Profitable

Back to Home
 

Investment Properties 101

The housing market is an intricate web made up of different types of investments. The most basic approach to property ownership is to buy a house and live in it with your family. However, many homeowners use the real estate market to invest in and turn a profit. An investment property can be a long-term endeavour or an intended short-term investment. This is the case with what is known as "flipping” a home – real estate is bought, remodelled and renovated for a quick turn-around and sold for a profit. There are many opportunities to get into the market! With an "Investment Properties 101” type of guide, answers to some questions may open your eyes to this wonderful opportunity!

 

Investment Property vs. Second-Homes

Some confuse investment properties with second-homes. This is not always the case. An investment property is real estate that is not your primary residence and is used to generate income. Investment properties also provide advantageous tax benefits. A second-home is a secondary residence that you and your family will use in addition to your primary residence. Think of a summer home or the cottage as a perfect example of a second-home. The property will be kept for the enjoyment of the owner exclusively and not rented out on a leased agreement. It can’t be used either for any time-sharing schemes.

 

Different Types of Investment Properties

 

Residential Property – This would be a rental property that would be owned and then leased to a tenant to make a profit. In Mississauga and Brampton, these would include condominiums, townhomes, semi-detached and detached homes. According to RentBoard.ca, rent rates range from $850 per month for a 1 bedroom unit to as much as $1,600 per month for a 3 – 4-bedroom unit. That is quite an opportunity to make some income on an investment property!

 

Commercial Property – These types of buildings would host space for businesses. Office buildings, industrial warehouses, retail or restaurant space or some vacant land that can be bought for commercial use in the future; all fall into the commercial property classification. Partner with a brokerage who specializes in, or who has agents who specialize in, commercial properties and the regulations that rule that realm of the real estate market.

 

Flipping Homes – When it comes to Investment Properties 101, flipping homes should have its own course! A savvy partnership between buyer and real estate agent will have a firm grasp of the market. In the GTA, JN Asensio is a realty group who have their fingers on the pulse of the community. They can help you start the process by finding an investment property to buy.

 

Recommendations are to find a 3 to 4-bedroom house that needs some tender loving care that was originally built between 1950 and 1990. You’ll also want to assess what the property would be worth if all repairs were made and any dated décor was updated. This is your goal selling price, or the After Repair Value (ARV). Then create a budget within the difference between selling prices and ARV to maximize your profit.

 

There is much more to flipping homes but this is the basic principle. For this type of investment, as well as commercial and residential, partnering with a great real estate agent or REALTOR®can prove to be very fruitful! Their experience and know-how can only lend to the profitability of your investment property!