Greg’s Top Ten Factors to Consider When Buying or Investing in Real Estate for Maximum profit.

Growing money 2The home that you live in is an investment! And if you buy well, likely your home will be worth considerably more down the road. Here are some factors to consider when buying that will help you get the best bang for your buck. By the way, when you’re buying your home there may be other reasons that override where and how you buy and that is okay! I am simply trying to provide some guide lines to help in make the most money you can when evaluating different areas.

10) Don’t buy new. You pay the developer for the premium (their profit) for new construction and it is only new once. As well, in many cases you are paying HST/GST, which goes straight to the government and does nothing to improve the value of the property. (These taxes, in a sense, make the value of your home worth less the day after you bought it, because the market will not recognise the tax value you had to pay). Besides, if you’re buying off the building plans (i.e. before the building is constructed) you’re not buying real estate, you are buying paper — the dream that one day the property will be built. Wait until after the project is complete and buy from some other investor who had to pay those taxes.

9) GDP. What is the Gross Domestic Product doing for the area? Is the province/state on an increasing or decreasing GDP rate? If the GDP is going up that means growth, which will coincide with a rise in property values (think supply and demand). If GDP is dropping, that will mean people could be losing jobs and there is less certainty about the future — which means there could be a drop in spending, especially on big items like houses…  Check out economic new by clicking here.

8 ) Jobs. Are people being laid off? Are there lots of people out of work? If people don’t have a job then they can’t pay a mortgage and won’t be driving prices up any time soon. If everyone has a job and there is demand for workers’ wages go up, both consumer confidence and housing prices go up too!

7) Vacancy rates. Your home might have a basement suite or you’re looking to rent out your new revenue property just as everyone is moving away (just look at Tumbler Ridge or some parts of Detroit!) How hard would it be to rent a suite? Take a look at CMHC reports by clicking here.

6) Rental rates. For an investment rental property, have people been paying the same rent for the last 5 years, or is demand likely to increase, enabling you to raise the rents in a year?

5) How is the market? Generally I don’t suggest trying to time the market but given the chance… Is it a Hot market? Many people get swept up in the euphoria of a hot market, but that is often when you get into buying in competition, which is not a deal! December 25th is one of the best days of the year to buy because the market is slow. If the seller is willing to deal with you in the middle of winter on a major holiday, you know they are motivated!

4) Political Climate. Are taxes expected to go up (HST vs GST)? Are laws or mortgage rules going to change (35 year amortization vs 30 years)? These changes can be hard to predict, but you want to do your best to stay in touch with what is going on so you know the rules and can work within them.

3) Local knowledge. Read the local paper and find out what is happening with local development. Is there a halfway house being built around the corner? Is there a five-star hotel springing up down the street? If you buy an older home in an area with newer homes being built close by, these will likely bring your property values up (just see how many teardown houses have been selling on the Westside of Vancouver for millions — yes, millions with an “s”!

2) Expert help. Make sure you are working with a crack team of experts who know the right questions to ask, so you don’t have to. Mortgage specialists, realtors, lawyers, home inspectors. ect. can provide you with knowledge in such a way that you can make educated and informed decisions, without having to put blind faith in others (it’s your money after all!).

Growing money1) Know your purpose. If you are clear about what you want it is a lot easier to find it! If you want to invest, know how you plan to do it. Do you want a cashflow properties, or a handyman special? Do you want a mortgage helper, or a nice house with a white picket fence down the block from the school? Knowing what you want makes the rest will become easier.

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