Understanding Real Estate Investment Barriers in Canada
Published October 6, 2019
Last modified: June 8, 2020
Are you planning to start investing in real estate? Well, it is a tricky business. However, with a hold of a few things, you can unlock great margins. Whether you deal with rental investment or directing buying and selling of land, there are hundreds of unforeseen catalysts that fluctuate the margins on your investment. Moreover, buying and selling is a slow-paced business and often requires patience.
In general, it can be a daunting experience if the coin flips towards the unfortunate side. It is important to analyze the risk factors and the respective drawbacks of the system before initializing the investment. Here are a few barriers that a client may face.
Real Estate Investment Barriers in Canada
1. Inflexible Return
You cannot estimate the investments in real estate with real returns steady profits. They do not always generate high profits and it may often be just sheer luck that some person got benefit out of the real estate investment.
The mere profits that have been acquired may not be credited with the planned costing, financial statements, or improvising the required property. In such circumstances, it is best to take on real estate investment trusts.
Investing in real estate is not for the faint of heart. Investors must understand the risks and be able to absorb losses in a down market. – Chris Atchison, The Globe and Mail
2. Tax Filings
Certain policies in Canada differ from that of the world, and hence, some tax policies are enforced that may prove to be compressing in terms of real estate investments. What investors do is buy a property, and to sell it for a high price, they renovate it and improvise on its interior and exterior.
By selling the property immediately, the investors hope for immediate and quick payment. But the thing that they do not consider is that when certain situations arise, there are taxes compressed which direct the investors to face a downhill consequence.
However, in such, what is recommended is that the properties be purchased and rented for which there is profit expected at the outcome.
3. A Hazardous Plot
When purchasing a real estate property, it is important to analyze and inspect the site before purchasing it. The reason why it is so important is that there existed various cases when the purchased plot looked as beautiful as the pictures depicted it to be.
But when the time came to inhabit the respective site, there exited serious environmental problems that could not have possibly accommodated the inhabitants within that area. This posed a problem for the investors as even the legal could not have been done any good.
Such cases pose for a magnitude of loss and result in a negative outcome for the investors.
4. Underneath the Surface
There exists the need to scratch the surface of the plot before purchasing it. There have been several cases of the investors investing in overseas properties being tricked. The most common reason being the transitioning of the otherwise beautiful plot into a duped nothing immediately after the purchase.
In such situations, it is always better to connect with a local inspector who has knowledge of the overseas properties and even with local properties.
5. Inspecting the Property
The main problems that arise with real estate investments are the lack of supervision that is associated with the property. People rely on impressive statements by real estate agents. This is the most common mistake investors can ever make.
This causes the property unsupervised, and later turn into a purchase without any inspection. Even google maps are not referred to be associated with this certain aspect as there are maps that are outdated.
What you should do is see the sight for yourself, see how well it accommodates to the budget you have planned and whether the cost does justice to the environment of the property. Do not fall for the unseen purchase unless absolutely necessary.
Check this video out to know more how to inspect your property properly.
6. Singling the Plot
After you have bought the property, it is important that you analyze the property for what it could potentially provide. What people do is single out their respective properties with respect to the area and then think of renovating them.
This is a mistake because this results in an extreme loss. When people invest all their balance over a single project in a large property, and it does not carry much potential to be as beneficial as expected, according to research, then the whole idea goes redundant.
What you should do is divide and conquer. Divide your property into smaller projects such that they generate greater profit than expected such that there may exist certain projects that can compensate for the loss. However, there are some places that provide great profit for investors in Canada.
Which Neighbourhoods in Canada Should You Invest?
Yorkville attracts a wide number of tourists, shoppers, and residents due to its super trendy nature.
This area offers plenty of high-end galleries, malls, studios, café, and fine dining restaurants.
Hence, the business of buying and selling land in Yorkville is definitely a profitable investment with reasonable margins.
It hosts Toronto’s international film festival and hence, is a dream residence for many Hollywood fans.
2. King West
King West makes it to Toronto’s most renowned neighborhoods due to it being home to commercial avenues and offices. This modern-day neighborhood hosts many young professionals and families due to being super close to Downtown Toronto.
Hence, King West is one of the hottest areas in Downtown to invest in. As a real estate investor, you would find a great number of opportunities in this town due to the larger interest of professionals in the area.
The neighbourhood offers a wide variety of real estate investment options such as single-family unit homes, condos, penthouses, townhouses, and apartments.
3. North York
North York is one of the largest neighbourhoods of Toronto located north to Old city. It is always a wise investment for real estate investors due to its prime location.
North York is between Etobicoke and Scarborough. Since it is highly populated, it always has a large number of interested buyers. Hence, the buy to sell duration is shorter.
North York holds a commercial significance to its land as it a hub of various head offices. Both old and new towns of the city are in proximity to North York which is one of its unique selling points.
The business center of North York is called The Central Business District. So, if as an investor you land property in a commercially populated area, the selling margins are potentially high.
Etobicoke makes the western part of Toronto.
The town is known for its natural beauty and sightseeing.
A lot of people who prefer living further from the hustle-bustle of Downtown prefer Etobicoke. Hence, a real estate investor it is a unique area for you to invest in.
There exist various problems with investing in real estate, but it is not something that the industry cannot handle.
The risk factors are associated with every form of work; however, with real estate, the risk weighs a little more. But if you are up for the adventure, do join in for the profits are satisfactory enough.
If you’re looking for condos that you can invest in, you can browse our site here.
Jordon deals exclusively in Pre-Construction Condos. Not taking on any Resale clients allows him to focus in on his niche and provide unparalleled advice and knowledge to Precondo’s clients. Feel free to get in touch with him here.