How to Find Safety in Scary Real Estate Times
The following is a guest blog post By Henry J. Svec, Founder Greener Project Development Inc.
You live in Vancouver, Toronto, London or Kitchener Waterloo and all around you people are talking real estate.
Even the Uber driver (formerly Cab) is telling you about an uncle who just sold his pathetic two bedroom one bath home in Toronto for $950,000 and is looking to invest. He’s thinking of buying 2-450 sq ft. condos for $450,000 each and renting them out. Problem is not that long ago those condo’s were $150,000 and that pathetic house slightly more.
What if the market returns to those levels?
Or you may be a seasoned investor looking to invest to increase your cash flow from the 2.5% offered in a bond or GIC.
When you look at investing in a multi-unit or even four-plex you note the cap rates are barely 1. That’s right, with prices so high after you pay off all of your costs and the tenants really pay you monthly, you are making 1% on your investment in Ontario or British Columbia.
There has to be a better way.
Two of the most important aspects of investing for Safety are the region you are investing in and the quality of your property management.
Region
It’s the East Coast of Canada-Nova Scotia by far. There if you purchase a $400,000 duplex chances are if the market crashes you are sitting at $350,000 not the types of losses you would get in Toronto or Vancouver. Cap rates are also much better in the 5%-8% range depending on the quality of the building and type of property you choose.
Property Management
Before you buy anything, you need to secure professional competent management. In Nova Scotia our choice is TreePad. Until we were able to work with Joshua and his team we struggled with vacancies at 50% in some buildings. Other property managers in Ontario were focused on up-selling their services and rarely were available to help with tenant needs. Like buying a bond, we never hear from tenants (they don’t have our contact information) funds are deposited in our accounts promptly and without issue.
If there is a late payment or tenant eviction TreePad handles that and we are only told at the month end review.
Before you look to invest that windfall from the sale of that home in Toronto or Vancouver or other parts where prices are holding on, consider Atlantic Canada.
Start with an interview of the founder of TreePad Management and make sure it’s the right fit. Their parent company Air Realty can help hunt down good solid cash flow properties. Only high quality properties are purchased and managed.
There are no guarantees but there is one thing I know after investing in real estate for over 35 years.
There is nothing wrong with taking a profit and turning that into a multi-generational investment portfolio in the last bargain in Canada-Nova Scotia.
What are you waiting for?
Visit TreePad’s site for more details.
