Real Estate Investing – Toronto and the GTA

What is real estate investing

Real estate investing generally doesn’t mean buying a home to live in. While a home purchase may result in appreciation (although probably a lot less than you think once you factor in interest, repairs, utility bills, taxes, closing costs and inflation), you’re not getting the tax advantages associated with investing or a monthly cash flow. And since you’re not getting any rental income, you’re sinking your own money into expenses that do not contribute to its appreciation. Think mortgage interest, property tax, insurance, utilities, lawn maintenance etc., In an ideal investment situation you would never have to dig into your own pocket because the rental income would cover all those costs.

Plus, since you always need a place to live, it’s hard to buy and sell your home at the most adventageous market time, as you would with a true investment. Instead, you usually buy your home when you need the space and can afford it, and sell it when you don’t want to live there anymore — it’s rarely possible to time the buying and selling as to when it will make you the greatest return, because your main consideration is if the house is serving your family’s needs, not if it is making you the most money.

Besides that caveat, there’s plenty of ways to invest in real estate.

Here are a few common ways you can make a healthy return off property:

  • Purchase a REIT and enjoying the relatively high payouts and potential stock appreciation
  • Purchase an exchange-traded-fund composed of REITs
  • Buy a property and rent it out, enjoying the monthly cash flow while waiting for appreciation
  • Buy a property, upgrade it and sell it quickly for more (flipping)
  • Buy a property to live in and rent out a portion of the home, like a room or basement