Ways to Profit from Real Estate Investments

There are many ways to profit in Vancouver’s hot housing market and now is the time to buy. In Vancouver’s rapidly appreciating market, many are sitting on built up home Equity, which they are eligible to borrow from. I will go more into detail about home equity in my next article; however today I will be going over a few ways to invest in Real Estate with Mario Felicella.  Joel’s over 25 years industry experience, his market knowledge and relationships have elevated him to the top of Vancouver’s Realtors List. Here are a few ways Joel recommends as great opportunities. 

1. Rental Properties

Owning rental properties can be a great opportunity for individuals who have DIY renovation skills and the patience to manage tenants in order to fully maximize your profit from your investment. This strategy however requires a substantial capital to finance upfront maintenance costs and to cover vacant months; due to tenants.

Pros

• Provides a regular income stream and properties can appreciate.

• Maximizing Capital through leverage.

• Many tax-deductible associated expenses.

Cons

• Difficulty managing tenants, potential damage. 

• Reduced income from potential vacancies. 

2. House Flipping

This is an option better suited for an experienced investor with significant experience in real estate valuation, marketing and renovation. Requires capital and the ability to do, or manage repairs as needed. Typically Flippers often look to profitably sell the undervalued  property in less than 6 months. 

 Pros

• 1. Ties up capital for a shorter time period

• 2. Can offer quick returns.

 Cons

• 1. Requires a deeper market knowledge, and understanding of market value and timing.

• 2. Fluctuating markets, cooling unexpectedly

3. Real Estate Investment Groups

REIGs are ideal for people who want to own rental Real Estate without the hassles of management. Requires a significant capital cushion and access to financing. 

Pros

• 1. Income and Investment Property Appreciation.

• 2. More hands-off approach than owning/managing rental properties on your own.

Cons

• 1. Vacancy risks; finding the right tenants.

• 2. Fees more similar to those associated with mutual funds. 

• 3. Susceptible to unscrupulous managers

4. Real Estate Investment Trusts

REITs are suitable for investors in need of portfolio exposure in Real Estate without your traditional Real Estate Transaction. Corporation uses investors’ money to purchase and operate income properties. Purchased and sold on major stock exchanges like any other stock.

Pros

• 1. Essential dividend-paying stocks

• 2. Core holdings tend to be long-term, cash-producing leases.

Cons

• 1. Leverage associated with traditional rental real estate does not apply. 

5. Online Real Estate Platforms

Real Estate investing platforms are for those who want to join others in investing in a bigger commercial or residential deal. The investment is made via online real estate platforms which are also known as ‘real estate crowdfunding’. Still requires significant investing capital, although less than what’s required to purchase the properties outright. 

Pros

• 1. Can invest in single projects or portfolio of projects.

• 2. Geographic diversification.

Cons

• 1. Tend to be illiquid with lockup periods.

• 2. High management fees.

Key Takeaways

Aspiring real estate owners can buy a property by using leverage, paying a portion of its total cost upfront, and paying off the balance over time. One of the primary ways in which 

investors can make money in real estate is to become the landlord of a rental property. People who are House Flippers, buying up undervalued or distressed  real estate, fixing it up, and selling it, can also earn significant income, by maximizing their profits. Real estate investment groups (REIGs) are a more hands-off approach to make money in real estate. Real estate investment trusts (REITs) are basically dividend-paying stocks. 

Joel Korn -  Sutton Group West-Coast Realty, does not personally endorse any of these methods specifically, and his expertise is in methods 1. Rental Properties  and 2. House Flipping.

For more information please call Joel at 604.722.4588. Sutton Group West-Coast Realty.