#1 Get A Mortgage Pre-approval:
Are you ready before your Real Estate Investment? The best investments do not stay on the market for long. Many times they go into multiple offers as they are highly sought after. Read about the types of Real Estate Investments.
It is imperative that you have these in place:
- A mortgage pre-approval
- Home Inspection prior to making the offer (if there is a specific offer acceptance date/time) if needed,
- Gone through the Strata documents / Title Search / PDS (Property Disclosure Statement) to better understand exactly what you are buying.
- Making your offer as clean as possible raises the chance of success.
#2. Current Value Assessment:
Has your Realtor assessed the ballpark CURRENT value for the unit? Every licensed Realtor would have access to statistics that can calculate where the market value would be at. Most of the time the accepted offer would be very close to the calculated number. This would set out as a guideline when making your offer.
#3. Have you discussed with your Realtor what your goals are?
Realtors live and breathe Real Estate. Realtors who monitor the market on a daily basis is crucial to your success. This experience allows them to advise on sub-segments of each market to align with your goals. You may find a property which is of great value, but how is the growth of that property going to look in the foreseeable future? How is the rental market around that unit? All these things are to be considered.
#4 How much risk are you willing to take on?
Just like most things in life – the bigger the risk, the bigger the reward. How much down payment are you putting down? What would be your mortgage payments? What would you place more emphasis on – capital gains, cash flow, or cap rate?
#5 How long are you looking to invest in this property?
Have you spoken to your mortgage broker or bank about the structure of the mortgage to best benefit your timeline?
#6 What are the reasons for choosing a specific area?
You need to know the pros and cons of the area you are looking in to be better prepared for the ups and downs that will come.
#7 IF the market corrects and drops, will you be ok financially?
Nothing is 100% guaranteed when it comes to investments. You need to be prepared for both the ups and downs of the market flow. Perhaps you were looking at a 2-year investment. What if in 2 years, the market turns south? Are you prepared to hold on to it longer to continue paying the mortgage, property taxes, strata fees, insurance, etc.?
#8 How old is the property that you are looking to purchase?
This would usually indicate the work that may be coming due, whether in special assessments in strata properties or out of pocket for non-strata properties like single-family houses. Do you know the complications and potential costs and have you budgeted for it?
#9 What is the current rental market doing in the area you are looking at?
What are similar units renting for? This is something you can find out by spending a few minutes a day on Craigslist to get a better idea of the average so you know what to expect.
# 10 What is your BUDGET?
This is arguably one of the key factors to consider before proceeding. You need to really figure out what your budget is, and look for an area that your budget would fall within the average of ideal investments. If your budget is too low for the area, you would be looking at older imperfect units which require a lot of upkeep and maintenance. If your budget is too high you may be risking your exit strategy when the time comes. Knowing your market is of extreme importance when entering into the investment world.
If you have any questions or would like someone to guide you through the process, please give us a call. At Yao Real Estate, we truly desire to fully understand your needs and goals and would be privileged to assist.