Real Estate Investment

Real estate has proven to be one of the greatest wealth creation tools for centuries.

The simple fact that every person needs a home and every business needs a location.  This is why  there has been strong demand for property throughout history. 

What makes real estate a very powerful investment tool is the concept of leverage.  Real estate is one of the few investments where a bank will allow you to buy a large asset with minimal money down.  This allows property owners to capture capital gains on the entire property while limiting their personal investment.

Although small investment properties can be purchased with virtually no money down, it is much safer to bring some money to the transaction.  With a reasonable down payment it is possible to find investment properties that carry themselves, where rental income will meet the maintenance, mortgage and other costs. 

This situation is extremely powerful.  The property should be appreciating in value while your mortgage is being paid off at the same time.  The owner is winning two ways.

*Please note that this is a simplified graph for demonstration purposes only.  Past history of price increases does not guarantee future appreciation.

Back to Top

Flip that Property 

Everyone has seen the television shows where people make a million dollars having a lot of fun and successfully flipping a property in only a 30 minute episode. 

Although we have helped individuals make significant amounts of money flipping properties, it is not nearly as easy as on TV.    First, these shows were shot in the US before the subprime meltdown which means that buyers could likely get 110% financing on virtually any property if they had a pulse and could sign their name.  There are also numerous carrying costs to consider that these shows almost never take into account.

This does not mean that there are not great opportunities out there.  It simply means that partnering with a knowledgeable Realtor who has worked on flips can be the difference between profit and big loses.  A good real estate resource is working for you to find the right projects at the right price.  Budgets, timelines and a very concise plan for this type of investment is critical.  

Back to Top

The same principles apply to investing in commercial property.  A large number of commercial properties are rented to business tenants and present great opportunities for landlords.  There are also opportunities to improve commercial properties that are not at their highest and best use.

Commercial properties require significantly more upfront investment than residential opportunities.  The fact that lenders require a much high percentage down payment on a commercial property combined with the greater value of commercial real estate means that an investor needs to have access to significant funds and be in a very strong financial situation.  Working closely with a realtor and mortgage professional will help potential commercial investors target their focus on the right price range and type of property.

Back to Top

Purchase Plus Improvements 

This mortgage option enables you to be approved not only for the purchase of your property, but also for additional monies to cover the cost of improvements you are planning to make as soon as you take possession.  You will typically require contractors quotes to determine the value of the work to be completed.  On the closing day, you will receive the funds required to purchase the property, the funds for the improvements will be released to you only after the lender has confirmation that the work has been completed.

This is an excellent option to ensure you will have the funds to fix up a property before you begin the work.  Most lenders will not lend on an unfinished property, so be careful to ensure you have enough money on hand.   If you run out of money part way through a renovation you may have a very difficult time to increase a mortgage. 

Click here to contact us and we will be happy to provide you with more information about this mortgage product.

Back to Top

Free Newsletter
Enter your email address to receive our informative Newsletter.