5 Tips to Becoming a Savvy Investor
When a buyer comes to me, whether they are looking for their principal residence or an investment, I always ask: What is your mortgage rate? ‘Savvy’ purchasers have already discussed this with their mortgage broker or bank.
You want to make sure you are receiving accurate information and competitive rates always. Unless this is a cash deal, we need to know the rate to determine your costs. I’ve also had the unfortunate experience of finding a fantastic property, but because we were waiting for the bank to approve the mortgage, we lost the deal.
2. Having a Savvy Budget!
Will you be in a positive cash flow and do the numbers make sense? Planning to invest in a rental property, requires a bit of homework. Make sure the rental amounts support your monthly costs. For example, if you’re buying a property and your payments are $1200 per month plus taxes and HOA fees, do the rental amounts in that community support your payments? Does the home require any repairs and how much will they cost. It is important to have the numbers figured out before you invest.
In the 2013 the Forbes list of Self-Made Billionaires, after technology which ranked 2nd on their list, real estate produced the next largest number of self-made Billionaires. I wanted to become an investor after I bought my first home and saw the value in real estate in my early 20’s. It made more sense to me than RRSPs or GICs because it is tangible and I felt I could better understand property values over time, “when you don’t know what to invest in, buy real estate and wait“. We all heard our grandparents or parents talk about the $5000 property they could have bought that is now worth 100 times that. Yes, real estate is a long term investment, but a secure one, as long as people need homes to live in.
4. What type of savvy investor are you?
Do you want to be a landlord or will you hire a property manager? Would you prefer to flip houses or do you have the expertise to build inner city homes? When you sit down with your real estate professional and mortgage specialist , having a clear picture of your real estate goals will put you on the path to becoming a savvy investor. With any investment, you should assess your expectations and determine the level of risk you are comfortable taking.
I have seen many mistakes along the way and I would prefer to learn from others than make them myself, so have a team of professionals that assist you. When you work with an experienced Realtor they know the market, they are not emotionally attached to specific properties, areas, etc…and they work with buyers daily, which gives them valuable insight into what people want in a property. They are also the ones you will call in the future when/if you want to sell, so they have a vested interest in making sure you have paid a good price. As a real estate professional, I have a team I work with which includes mortgage specialists, home inspectors, appraisers, contractors and lawyers, all of which are needed to make your investment purchase a smooth one. Be a savvy investor and make sure you start with a savvy team of professionals.