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Investment Properties 101: Good Tips to Know Before Starting

by | May 24, 2023

Investment Properties

Investment Properties

Introduction

Last Week we discussed Amortization Periods and how it is an important aspect to consider when signing a contract with a lender. As we have discussed in the past on many blogs, the personalities of your mortgage are just as important to consider as the rate. A lender can persuade you with the rate, so you want to be careful and understand everything that you are signing up for.

Today, we are going to talk about a hot topic in the real estate news these days, and that is investment properties.

There are a lot of things to consider when going into investment properties, and that is why we are going to split this topic up into a few different blogs. Today, we are going to discuss things you will need to start out in investment properties.

Personalities of the Mortgage

Before we get into the most important elements of investment properties to understand before starting, we want you to also make sure that all personalities of the mortgage that we discussed in previous blogs are important to understand. These will take place in investment properties as well and you want to leverage the best deal for yourself without getting persuaded by a rate.

We definitely recommend checking out our other recent blogs that discuss different personalities of a mortgage.

Down Payment for Investment Properties

When it comes to investment properties, you will need a minimum of 20% down to be able to get a mortgage with a lender for investment purposes.

It may seem like a lot, but in the long run this is better for you, because you do not want to stretch yourself too thin, and this 20% provides good starting equity in a property that will help you be able to leverage future holdings and also set you up for potential life emergencies.

Geographical Region Consideration for Investment Properties

It is very important to consider geographical region when you are going into investment properties. You do not want to go to an area that you can’t afford, but you also do not want to have investment properties in a region that has little room for growth.

It is important to consider these and do a lot of research before deciding where to invest in properties. A lot of people invest in properties near their home property, but also a good chunk of people invest in regions that are located quite far away (For example someone in Vancouver deciding to invest in properties in Saskatchewan).

We recommend staying within the same region for most of your investment properties. Obviously different countries have different rules about investment properties and mortgages and we recommend sticking to the same nation, but it’s also important to know that rules are different province to province.

There are a lot of elements to consider when looking at geographical regions, which is why we recommend doing research, speaking to a mortgage broker (preferably one who has invested in properties before), and reaching out to people you know who have had success investing in properties. You should not just invest in any investment property, just as you would never invest in any stock without proper research.

Long Term Vison in Investment Properties

Our last thing to discuss in this blog is understanding that this is a long term vision. Real Estate investing is not an overnight success, and you must understand many variables to be of ultimate success.

Understanding where and how you want your investment portfolio to develop is quite important. You may think you will only own 2-3 properties, but many people expand into much more, which is why it is crucial to have that thinking from the beginning so you are prepared for every obstacle

Conclusion

Investment Properties are such a great way to investment your money and create sustainable passive income. However, there are a varying amount of pieces to consider which is why a detailed approach is key.

Stay tuned for more of our blogs that touch on Investment Properties and things you should know to be successful. 

We have lots of experience with investment properties and would love to help navigate your way through your first (2nd, 3rd, etc.) investment property. We know we can get you on a path of success that you will be proud of. Call us today!

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