The pros and cons of buying an Investment Property in Etobicoke Ontario!:

Real Estate investing is easy and fortunes are made in a simple manner. For example, and investor decides that a desert area will eventually become an industrial development. He purchases a number of acres at a very low price. If his guess turns out to be correct, ten years later he sells the land hundred times more than what he paid for it.This can happen in any part of the country and is not an exceptional case.

As the population keeps growing in the U.S., land prices continue to raise and it means that Real Estate will continue to offer one of the best investment opportunities in the country.

Compared to most forms of investment, Real Estate offers greater profit potential. Of course, not every piece of land will turn out to be a winner, and despite the great potential rewards in some cases risks are involved, so the necessity of careful study before invest.

One of the problem of Real Estate is his lack of liquidity. Liquid assists are those easily converted into cash like stocks or bons. Most Real Estate investments take years before you can make some money, so it is not wise to tie up all your assets in this type of investment. Your financial situation will determine how much you can wisely invest in properties.

There is a difference between a land speculator and an investor. A speculator buys land with the intention to make a quick sale and fast profits and will not hold land for a long period of time. An investor, on the other hand, looks for a long time gain, and usually buys only what he can afford to keep for an indefinite period of time.

If you are new at this field, it is wise to refrain from any a speculation until you become more informed, and you will have to devote considerable time to study and research. It is wise also to consult specialists before you act.

Without realizing it, you already made a very successful investment in Real Estate if you bought your own home.

Before you look for areas to invest, consider the condition of your own house. If you have any plan for selling it, good landscaping has been known to considerably increase the value of a home.

Large profits can be attained by purchasing run-down homes and restoring them for eventual selling, but some factors have to be considered:

* You must know something about architecture and remodeling and get and idea of how much it will cost to get the house back into shape. Consider what you will be able to do yourself and what it will cost you if you have to have it done.

* The location of the house is the most important factor to consider. Study the neighborhood, shopping, and transportation facilities.

It can also be profitable to lease land for commercial use. Land which borders highway is extremely valuable for purpose such as warehouse, gas station, etc.

Land development companies frequently run advertisements offering country retreats. Be wary of these offers as they themselves make a large profit at the time they sell you the land, so it is much more profitable for you to buy your own.

When you buy property, buy at a price that involves a minimum financial risk. Invest only a modest amount of your own capital, when you sell, determine if a cash or installment sale is the best, based on your over-all income tax status. Learn by looking back on the mistakes made in the past and by reviewing the opportunities you have missed.

Prepare a list of all properties available in your area and think up the best future use of the properties. Learn to purchase land before there is a demand. To buy land well in advance is the only economical way at today's prices. Then hold the property until you can resale for large profits. Don't sell all your desirable properties and keep just lemons.

If you are willing to leave the cities, you should not have any trouble finding inexpensive land for sale. If you discover a tract of land appealing to you but not listed for sale, contact the Country Register's Office and he will tell you who is the owner. Get in touch with him and he could be willing to sell.

As a rule purchasing tracts of land within thirty miles from a growing city is often a sound investment. Deal only with qualified realtors. Be careful of individuals who offer quick profits.

Before taking any action, study what has been written about the subject. Know why you should and should not buy. Stay conventional and don't buy white elephants. Look for hidden defects and make the property attractive before offering it for resale. Study local conditions and be sure it is practical. Constantly look for bargains and quality properties with exceptional features that will make the sale easier. Follow up on For Sale signs, make inquiries.

When discouraging elements occur, minimize your losses by whatever means available. Don't throw away money on repairs for poorly located property or in an area of surplus rental units.

Before you attempt to sell, find out how the prospect can use the property profitably. Ask yourself if you would purchase it if you were in the prospect's shoes. Ask yourself if the future use will fit any of the many types of specific businesses. Can a hospital, a bank, an apartment complex, condominium or professional building be located on the property.

Learn to analyze the pros and cons of a real estate problem. Break it down into its various elements. Know if the answers you come up with are satisfactory and practical. Try different approaches to the problem.

You are necessary looking for the "top" or "bottom" of the market, or the current economic situation. You are looking for a variety of properties which have a higher value dependent on the use that can be established for them.

Are you the kind of person who hopes for the best and it usually happens? Maybe you ought to think twice before you get involved with a real estate investment of any magnitude, because if you don't plan ahead you're likely to get caught unprepared.

Ever wonder why you should prepare a budget for an investment property? You know the income and expenses are about the same every year, so why budget?

Surprise, the new roof you did not expect is needed now. All the tenants are complaining and will move out if you do not replace it this summer.

If it's hard for you to remember all of the expenses you might have come up with every year, you need to budget. Budgets are usually needed for larger properties. The definition of a larger property is up to you.

A precursor to establishing a budget is a thorough walk through (and note taking) of every corner of your property. Take your time. Take a friend. Make careful notes. Do it in a way that will make sense to you after you have left. Maybe prepare a form for each commercial tenant or apartment unit. Look for dry-rot, if the carpets are worn out, and if appliances are aging. Look at the condition of the roof. How is the exterior siding holding up? How is the paint job? Do you need to refresh the bark dust? Is the asphalt alligatoring, (yep, it looks like old alligator cowboy boots)? Estimate the remaining life span of the critical items (the roof, the driveway, etc.).

Next you need to estimate how much this will all cost. In many cases you will need to ask some vendors to come out and give you estimates. Get at least two opinions on any expenses over $2000.

Make sure the vendors are bidding the same products. There is a big difference between a torch down roof, and a built-up roof. Asphalt overlays, 1.5 inch or 2-inch also make a big difference in the cost. Evaluate what might be the better investment. Make sure that what ever you spend your money on it will last. If your attitude is that tenants are lower creatures and low-grade repairs are all they deserve, then you will forever be repairing your property. I digress back to strict budgeting.

Plan your budget on a 12-month basis. First review the income side of the equation. Plan on your rents. Can you increase them? Have you figured in additional income from garages or coin-op washing machines or cable TV or water meter charge-backs?

Next you need to calculate a vacancy rate based on your experience with the property. You can check with a real estate agents or appraisers to get an accurate handle for vacancy rates in your marketplace. The vacancy rate needs to be subtracted from the income before you subtract expenses.

Now plan for expenses. The major categories are likely to include:

Property management
On-site manager
Wage taxes
Advertising
Promotions
Water
Property Tax
Property Insurance
Sewer
Gas
Electric
Maintenance
Landscaping
Appliances
Tenant turnover (think of those vacancies...)
Replacement reserves (at least 2 percent -- maybe more for an older property)
Eviction expense
Legal, tax and bookkeeping help
Other expenses unique to each property

Once you have totaled the operating expenses and subtracted them from your income the result is called the net operating income. From the net operating income you subtract the mortgage payments. The result is the cash return on your downpayment.

The capital expenses you discovered in your walk through either need to be factored in a this point or planned for and paid out through maintenance or a capital expense line item.

Let's say you need a new roof on all five buildings in your apartment complex but you only have enough money for one roof. What do you do? Plan ahead for a couple of years and see if you can make repairs at the rate of one roof per year.

Keeping your property in tip-top condition is critical to tenant retention as well as to maintaining your property values. To do this successfully, you'll need to budget annually and you'll need to plan ahead to keep from being caught unprepared.

Try it, you'll like the results!

Conclusion

There are always opportunities in Real Estate during good times and bad, but it is up to you to pick and choose only those very best deals, especially during times when it appears that Real Estate values and demand have reached their peak or in times when it is practically impossible for most anyone to get bank loans due to the tight money market or impossible interest rates.

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