It’s looking like 2021 is going to be a promising year for real estate investors entering the Edmonton real estate market, especially if supply shocks and provincial rental policies keep driving cash flow deep into the negative in cities like Vancouver and Toronto.
The moves you make largely depend on where your starting point is, but we think the following options are smart moves for investors at the various stages of their journeys.
Whether you have a portfolio started already or are still looking for the first piece, 2021 is a good year to work on your portfolio. If you are holding properties that might be on the cusp of needing major work like a roof, furnace, windows, etc. it might be a good idea to consider re-allocating that cash towards a new property that will be free of major expenses for many years to come.
We understand. Investing in real estate can feel like an overwhelming process, and you’ve been holding off until you feel like you have all the knowledge you need for success. Or maybe you’ve been trying to time the market to get the best deals.
Listen up.
It’s time to get off the fence. Now is a great time to get started in real estate investing if you haven’t taken that step.
You’ve already waded into the real estate investment waters, and you’ve been doing well. With market appreciation on the rise, you’ll see a nice jump in the value of your properties, especially if you get in early.
No matter if you are a novice or have been in the game for years, something else to consider is the fact that mortgage rates are quite low at this time, which means it’s easier to find an entry point. For some, this just means that it’s more affordable than ever to start with a low-cost investment property, whether that’s purchasing something like a townhome or adding an income suite to the family home. Others are looking to maximize their earnings, and with low mortgage rates, they can buy a property that has multiple units.
While it’s tempting to try to time the market, you have to remember that every month you wait is a month you’re not building up equity in a property. If you wait another year, you will miss out on a year’s worth of mortgage pay down, a year’s worth of cash flow and most importantly a year of capital appreciation to your properties.
Do you have any underperforming properties? This is the time to get rid of them and turn to some investments with more promise.
For instance, the residential market in Edmonton is particularly strong right now. Experts are predicting that prices in the Edmonton market to continue rising with growing demand. If your portfolio includes homes that would be attractive to residential owners (more than real estate investors), such as single-family homes or townhomes, you could make a nice profit simply by selling to these types of buyers.
On the flip side, it‘s still a good plan to sell investment properties you no longer want. Plenty of people are excited about getting into real estate investing, and a property that’s underperforming for you may be the perfect place for someone else to get started.
You can take the equity you create from these sales and put them into a property type that suits you better.
If your investment properties are currently doing fairly well, you might instead decide that 2021 is the year that you diversify your portfolio. While there are certainly some benefits to sticking with whatever investment style works for you, expanding your repertoire can earn you big profits.
If you currently have apartment complexes, for instance, take a look at how single-family homes could work for you. If you own older properties, it might be time to try new construction. These types of properties tend to attract tenants who are willing to pay higher rental rates, so this move can definitely work in your favour over the long term. You have to crunch the numbers to see how it could play out.
When you’re first getting started with real estate investment, it’s natural to look at properties closer to the downtown area. They are attractive to young professionals - the type of people who are more likely to rent - because they’re close to businesses and at the centre of nightlife.
While that is true, there are also a lot of great new construction properties in suburban areas. These properties tend to be more affordable. Generally, they’re also bigger (often with backyards), attracting young families that want more space but aren’t quite ready to purchase their first home. Again, these tenants are going to pay premium prices for high-quality homes.
Additionally, the pandemic has shown businesses just how feasible it is to have people working from home. That’s not likely to go away any time soon, and people are going to be less concerned about commute time when they’re finding a home. Use this to your advantage.
Let 2021 be the year that you take your real estate investing to the next level. Give us a call to see how TriUrban can help make that possible.