Educate Yourself:
“Empty the coins of your purse into your mind, and your mind will fill your purse with coins.”
– Benjamin Franklin
Look at you! By reading this blog, you’re already sparked curiosity and began to educate yourself! By investing in yourself through education, you’re investing in your future growth potential. Education does not have to be an expensive college tuition, course, or professional designation. Through the internet, we’ve learned that education can be easily accessible and free through podcasts, YouTube videos, blogs, forums, articles, websites, etc.
Books, YouTube and podcasts are an excellent way to educate yourself and hear people’s real-life experiences. My personal favourite real estate podcast/YouTube channel is Bigger Pockets, hosted by Brandon Turner and David Greene. If you’re a real estate investor and HAVEN’T listened to the Bigger Pockets Podcast, it should be considered a crime – lol! Each week, Turner and Greene chat with investors to learn about their triumphs, hardships, and lessons learned along the way. One week the topic might be focused on REITs, while the next focuses on out-of-country investing and property management – the topics are truly endless. Additionally, you can visit their website and browse through an expansive list of blogs available or pose a question to the online public forum.
Check out the list of podcasts that Acquania Escarne from Wealth Noir put together for beginner real estate investors.
Additionally, your local market has endless resources available. Consider joining your local Landlord Associations. They educate, advocate, and act on behalf of landlords. By joining these associations, you can access exclusive discounts and gain a vast network of connections and educational resources. Additionally, the Real Estate Investor’s Network (REIN) of Canada provides a plethora of resources, webinars, reports, coaching, networking opportunities, etc., for individuals interested in joining its membership. REIN is an opportunity to gain insight from investors around the country and their experiences into future knowledge. CEO, Patrick Francey, launched a podcast in 2017 called The Everyday Millionaire, which focuses on creating wealth to support you, your family, and the surrounding community. Many listeners have left feeling inspired and thinking, “if they can do it, I can too!” Furthermore, the Canada Mortgage and Housing Corporation (CMHC) advocates for affordable housing and provides resources for buying, rental housing, developing and renovating, managing and maintaining, data and research, and finance and investing.
What are the different types of Real Estate investments?
- Residential:
- Commercial:
- Retail:
- Industrial:
- Land:
- Wholesaling:
- REIT
Residential is the most common real estate investment and includes any property used for residential purposes. Included in residential real estate are single-family homes, condos, townhomes, duplexes, etc. A standard tool that residential investors use is the BRRRR method, which stands for buy, rehab, rent, refinance, repeat. Every investor has their ideas and interpretation of the BRRRR method. Don’t worry; there will be a blog coming that focuses on the BRRRR method!
Commercial real estate (CRE) properties can be leased or rented for business purposes, most commonly office spaces. For example, a small accounting firm renting office space to conduct business operations.
Retail real estate consists of businesses and establishments that rely primarily on foot traffic and are in place for shopping and entertainment purposes. For example, a shopping mall is considered retail real estate.
Industrial real estate includes all buildings and land used for industrial operations. Industries that would utilize industrial real estate would be manufacturing, processing, warehousing, research, distribution, etc. Think of industrial real estate as businesses involved in getting products to the end-user or retail locations.
Land real estate involves owning a plot of land and leasing it to a second or third party. For example, individuals who own land may choose to lease or rent it to farmers in a second- or third-party agreement.
Wholesaling real estate is the process of getting land or property (residential, commercial, or retail) under contract, finding a buyer, and contracting the land or property to the buyer at a higher price. Wholesaling is most commonly used by investors with minimal start-up capital and a vast network to pull from.
Real Estate Investment Trusts (REITs) are the stocks of real estate. Nareit puts it best, “REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of property sectors. These real estate companies have to meet a number of requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors.” REITs can be spread across many different real estate types, or they may choose to specialize in one sector. Regardless, REITs are beneficial to investors who want a hands-off experience but looking to diversify their portfolio and seek capital gain.
Buyer’s Market vs. Seller’s Market:
The Royal Bank of Canada put it best, “A seller’s market happens when there’s a shortage in housing or more potential buyers than homes. A buyer’s market, on the other hand, occurs when there is a surplus in housing or more homes for sale than buyers. A balanced market happens when there is the same number of homes for sale as there are buyers.”
To simplify:
Seller’s Market = Buyers > Homes
= Demand > Supply
Buyer’s Market = Homes > Buyers
= Supply > Demand
Balanced Market = Homes = Buyers
= Demand = Supply
In a seller’s market, there are fewer homes than there are buyers. As a result, sellers have the opportunity to slightly increase prices as a way to profit off of the high demand. In a buyer’s market, there are more homes than there is demand. As a result, buyers have more negotiating power to decrease the listing price and get a better deal. Think of buyer’s and seller’s markets like winter jacket shopping. In the fall/winter, retailers can charge the full price for jackets as there is a high demand to stay warm during the winter – this is a seller’s market. In the spring/summer, retailers will choose to discount the winter jackets to minimize inventory resulting in the buyers getting a better deal – this is a buyer’s market.
Regardless of what real estate path you are pursuing, consider investing during a buyer’s market (periods of low buying demand) and selling in a seller’s market (periods of high buying power). These markets can vary depending on geographic location, so it is best to stay up to date on your local market’s trends.
Conclusion:
“The best investment you can make is an investment in yourself… The more you learn, the more you’ll earn.”
– Warren Buffet
If you’re planning on diving into real estate, educating yourself on real estate topics, market trends, associations, and types of real estate are of utmost importance. To maximize income, consider investing in a buyer’s market and selling in a seller’s market. Lastly, reach out to your local property management company – we are here to help!
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