1. Condo Investing Secrets Part 1: The Power of Refinancing
2. Condo Investing Secrets Part 2: The Power Of Leverage
3. Condo Investing Secrets Part 3: The Power Of Risk Minimization
Sad to see the series ending? You can dry those tears – we’ll still be sharing valuable content in the weeks to come.
Last week in the risk minimization article, we highlighted the need to diversify the areas you’re investing in. This week, we’re tackling something similar – it’s the cliche everyone in real estate knows: Location, location, location.
Although it’s a cliche and makes us cringe to hear, it’s true. The location of your property is incredibly important. You could have a gorgeous investment condo, but if it’s not in the right location, it could be worth much less than a well-placed property. That’s not to say you shouldn’t invest in up-and-coming or revitalized areas, such as Alexandra Park, but make sure the long-term fundamentals make sense.
You should always buy your investment properties with the future in mind. While it is difficult to know the ideal places to invest for the future, there are often signs that can point us in the right direction.
New Transit Developments – Whether it’s a new light rail transit with a stop near your condo, or a change in bus routes that would put you along a major line, having access to reliable public transportation right outside your door is a huge plus. And, if you buy before the changes are implemented, you may see greater appreciation in a shorter amount of time.
New Attractions – Is there something new and exciting being built in your investment area? A new mall? A museum? A new university building? A new sporting complex? Attractive new features can help your property appreciate faster and will draw in tenants like clockwork.
Up-and-Coming Neighbourhoods – Along with new attractions, be aware of the up-and-coming hot spots. Is the city pouring money into any particular neighbourhood? Is there a new hockey arena being built? New schools? Small things like these can be good indicators of up-and-coming neighbourhoods, which will mean more bang for your buck both for renting and for eventual resale.
For our favorite up-and-coming neighbourhoods, check out the Toronto Waterfront and Alexandra Park.
Consider the type of people you want in living in your investment property by looking at the demographics of the neighbourhood you’re investing in. Does the demographics fit with your ideal tenant?
Not sure how to do this? Spend a lot of time in the neighbourhood. Take in some dinners at local restaurants, have some coffee at local cafes, and take regular walks around the area. This is a great way to get a feel for who lives in the area.
Or, if you want to be more empirical about it, check out Statistics Canada census profiles based on postal codes. Once your profile is up, click on the census subdivision to get demographic details about the area. This data is based on the 2011 census, but standby for fresh data from the 2016 census when it’s available.
Once you have a tenant in mind, you can start deciding on a location. For example, if you are planning on renting to students, you want to make sure your property is in an ideal location for students! It may surprise you, but most students would not want to live in a retirement complex, or even outside major transportation hubs.
You also want to make sure your tenants feel safe where they’re living. Don’t just visit the neighbourhood during daylight hours. Take a late-night stroll through the area before purchasing the property. Do you feel safe?
Add these considerations to your condo investing formula and you will be well on your way to being successful. Consolidate your location consideration with the power of leverage, refinancing, and risk minimization , and you will be a condo investing rockstar!
Hopefully you’ve learned a couple tips and tricks throughout the Condo Investing Secrets series. But remember: all the helpful hints in the world won’t help if you don’t take action! Try to take an action step this week. That could mean scouting out a new investment area, talking to an advisor about refinancing your mortgages, or — best of all — talk with us about your options!
We always love hearing your feedback, so feel free to send us an email or give us some comments below!
Matt Elkind, Co-founder CONNECT asset management