Real estate investment is hot in Canada. In fact, residential investment is responsible for 7.5 per cent of the country’s economy. Before you become one of the many investors, check out some myths, so you’ll be prepared.
1. You Can’t Get a Mortgage on a Rental Property
Some investors try to secure a mortgage from a lender, only to be turned down. The lender might claim that you can’t get a mortgage on a rental property, but that is not true. The lender simply isn’t an expert in investment properties.
2. It’s Hard to Afford the Down Payment
You have to put at least 20 per cent down on real estate investments, and you might need to put more down if the property is in a high-risk area. That scares some investors off, but it shouldn’t. You can use the equity in your home or other investments to put the money down.
3. You Need Lots of Money to Invest
Don’t let this myth slow you down. You can partner with another investor or start the process by buying less expensive properties.
4. There Is No Longer an Investment Market in Canada
There are investment properties available all over Canada, and the market could get even better in the near future thanks to the government. For example, Vancouver passed a 15 per cent tax on foreign buyers to help Canadians have more access to properties.
5. Only Buy in a Down Market
A down market is a great way to get deals on properties, but you’ll also have to charge less in rent. Sometimes, the best properties are purchased in hot markets.
6. You Need to Invest Close to Home
Some people claim that you have to invest close to home, but it’s more important to select properties that allow you to reach your goals. You can always hire a property management company to handle the day-to-day tasks at your property.
7. The Value Will Always Increase
Real estate typically appreciates instead of depreciates. That doesn’t mean you won’t hit a downturn from time to time. The key is to hold onto the property for the long term, so you can enjoy a tidy profit when you sell it.
8. You Shouldn’t Raise Rents or Tenants Will Leave
When you buy a property, you might be afraid to raise rents because tenants will leave. That’s simply not true, though. You just need to increase the rents in tiny increments, so your tenants don’t get sticker shock.
9. You Need to Learn About Investing From a Property Guru
Property gurus will give you some information on investing in real estate. You just need to pay them hundreds or thousands of dollars. They aren’t selling the tricks of the trade, so instead of attending a seminar, get out there and get your feet wet with real estate investing.
10. It’s Quick and Easy
You might think you can buy some property and then just start cashing your checks. While you can make money with real estate investments, it takes time and work.
Are You Ready to Invest?
Learning the truth behind the myths is the first step in the investment process. Now, it’s time to decide if you want to jump in and purchase your first investment property.