After writing: “4 ways to lose your shirt flipping Real Estate” we received a few emails describing how we are wrong and there are a lot of opportunities to make money flipping homes in Downtown Toronto neighbourhoods. Sorry to burst your bubble folks, but it just isn’t true and most of you get that. It all comes down to one thing: In this market investors are competing against end users. End users could care less about profit margins. They just want to get their kid in the right school catchment area and will pay through the arse to do it. Bye bye profit.
Now that we’ve got that out of the way let’s get to the point.
The least stressful and most effective way to build wealth in Real Estate is to Buy, and hang on tight.
The longer you hold, the more equity you build and your cash flow increases. If you ever need cash for other investments you can use your properties as tax free ATMs. As long as your rental income covers expenses, you’re good. Fast forward a decade and your property is worth more, your rents are higher, and you’re skipping to the bank every month with a fist full of rent cheques.
It’s normal for the value of Real Estate to ebb and flow. A property you buy today may be worth less in the short term but that’s why this is a buy and hold game. A savvy investor knows not to panic when the market dips. Rental prices tend to be less volatile. As long as you’ve bought in a renter friendly location (close to subways, schools, trendy hoods) then you will likely have very little vacancy…and that’s what it’s all about. Taking those cheques to the bank every month. Every now and then evaluate the value of your property and see if it makes sense to sell and move into something with more cash flow potential.
Already have an investment property or want to get another one? Give us a shout and we’ll go over details.