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Real Estate Investment Newbie Guide – what, when, where, why and how?

Real Estate Investment Newbie Guide – what, when, where, why and how?

If you are an investment newbie, you probably have a lot of questions in mind. What is real estate investment? Why should I invest my time in it? Is it worth investing my time? Where do I look? When do I start? How do I proceed?

To help clarify things, here is our guide for real estate investment newbies.


The “What”

What is real estate investment?

In the past week, I went around asking this question to some of my friends both in and out of the real estate field, and the responses I got were quite interesting.

“Oh you mean flipping a home?”

“I think it’s like buying a house and selling it for profit?”

“Buying a house…?”

“Buying a property and renting it out?”

The most surprising thing I found was that, no one was sure what real estate investment really means. They all sounded hesitant with their responses.

But the good news is that everyone was on the right track. Real estate investment involves investing in a real property for the purpose of making money.  There are  numerous ways to do this, some simple and some very complicated, so to simplify this for a newbie, I’ll just speak on the most commons methods to invest in real estate.  Most people purchase property to either, 1) buy and hold to generate rental income, or 2) buy and flip or to sell to someone else when the market price goes up.  But let’s be honest here, there is nothing wrong with doing both.


The “Why”

Why should I invest my time in it? Is it worth investing my time?

Passive income

As you may have guessed, the keyword here is passive income. Imagine earning supplementary income in your sleep – sounds too good to be true? It’s not. With the right properties and having other people manage the property for you, it is very possible for you to make money while you plan your upcoming vacation in Hawaii.  But is the income really passive? Yes and no.  Yes, if your property manager will treat your property like it’s their own, which is unlikely.   Therefore, in the real world, most people will need to spend a little bit of time to manage the managers, and to keep track of what they are doing and if it is inline with your expectations.

Leveraging other people’s money

Yes, you read it correctly. Unlike daily commodities, you don’t need to pay the 100% cash for real estate.  As this is a hard asset that the banks can take back in-case of defaulting on payments, they will lend you up to 80% of the purchase price in the form of a mortgage. If the investor chooses to use their home equity line of credit (HELOC) to finance the down payment and all starting costs, you can effectively leverage 100% of your property using the bank’s money.  How cool is that!

Predictable Returns

When you do the math before you purchase, you will already know your estimated monthly expenses and income. As the years pass, it is likely that your property’s value is now worth more than when you purchased it. Essentially, this means that as your mortgage balance is going down, your home value is going up. Everything in between is the equity on the property that your tenants helped you get.  What a beauty.


The “Where”

Where do I look?

Real estate investment will most likely be one of the most significant investments of your life, so it’s obvious that you want to put a lot of thought into it and make an educated decision on the location. Areas where there are job growth, population growth, and low vacancy rates is what we would recommend.

Check out the list of top British Columbia Investment Cities on our website at https://pointbinvestment.ca/where-to-invest/


The “When”

When do I start?

Assuming you have the money to invest, my honest answer to you is as soon as possible. Having said that, when do you know you’re ready?

Consider asking yourself these questions:

  • Is your source of income secure enough for you to be making an investment?
  • What are your priorities in life? Would real estate investment help you fulfill your goals?
  • Are you able to set aside some time to connect yourself with resources that will help you get your first property? E.g. time to do research, time to meet with mortgage brokers and realtors who could help you with your investment, etc.


The “How”

How do I proceed?

Find a realtor who is also an investor him/herself. They will already know the best places and properties to invest in, thereby fast-tracking your learning.  You also get the opportunity to leverage the knowledge and experience from the real estate investor’s team.

In addition, the team will be able to guide you through a wide range of considerations from conducting a cash flow analysis to supporting you through your concerns about the process of investing (and they could definitely relate because they’ve been in your shoes before).

You think you’re ready? Unsure? That’s okay! It’s never too early or too late to start investing in real estate.  Contact Point B Investment Real Estate Team today by emailing us at success@pointBinvestment.ca to learn more about real estate investment and get advice from experienced professionals.

We look forward to hearing from you!


***Ask about our FREE Lunch ‘n Learn Seminars beginning in November 2016***





5 Tips to Investing in Vancouver Real Estate

5 Tips to Investing in Vancouver Real Estate

If the Vancouver real estate market has you wondering whether it’s even possible to earn your desired passive income, we have a few tips to share with our valued Investors and Investors-to-be to help you decide and invest with confidence.

Tip #1: Always do a cash flow analysis. Always.

Vancouver real estate is very expensive, so before you decide to commit to an investment, the most important thing to do is to conduct a cash flow analysis. No matter where you invest, whether here in Vancouver, or in another city, province, or country, a cash flow analysis of your real estate investment will help you make the most objective decision.

What does a cash flow analysis tell us?

To put it simply, a cash flow analysis will help you visualize if your projected income will cover all of your relevant expenses. Additionally, it will help put your emotions aside as it creates objectivity in your decision-making.

Our advice? Do research, do a cash flow analysis, and leave it to the numbers to help you make a decision like a real estate investor.

Tip #2: Never go into a bidding war not knowing your upper limit

It’s important to know at what price you will have to walk away from a deal, for several reasons. First, you may (unknowingly) get too emotional which could easily lead to overspending. Second, there is no point bidding for a property that may end up making your cash flow negative, defeating your purpose of investing. Third, you don’t want to buy at the height of the market. In real estate investing, you buy low and sell high, just like any other investment.

Tip #3: Furnish

Furnished properties generally make anywhere from $300 to $500 more on monthly rent than unfurnished ones. This is definitely true here in Vancouver, where the vacancy rate has declined to less than 1% as demand for rental spaces outpaced supply (Fall 2015 CMHC BC Rental Market Report).

The tenant profile for furnished rentals is generally business executives, or out-of-town short-term renters such as students and workers.

So why not take this opportunity and have some fun furnishing your investment property and make a little more money along the way?

Tip #4: Be Open-minded

Have you considered investing outside of Vancouver? Being open to investing in other areas in BC such as Burnaby, Surrey or Kelowna, may lead you to investments that produce a better ROI (Return on Investment).

Additionally, properties outside of Vancouver are often more affordable while still achieving similar rents. Essentially, you would be paying less for the property, but receive similar monthly rental income. For example, a three-bedroom condo in Kelowna is priced at $365,000 while a comparable unit in Vancouver scores at almost $1 million. Even if you receive higher rents in Vancouver, it may not be cash flow positive, especially with expenses such as property tax and strata fees to cover.

To give you a better idea, consider these two properties:

  1. A Kelowna 3-bedroom condo, price = $365,000, monthly rent = $2,500
  2. A Vancouver 3-bedroom condo, price = $905,000, monthly rent = $3,700

Annual rental yield of Kelowna condo = ($2,500 x 12) / $365,000 = 8.2%
Annual rental yield of Vancouver condo = ($3,700 x 12) / $905,000 = 4.9%
*Figures were obtained from real comparable properties.

As you can see, the Kelowna property produces a higher annual rental yield than that of a comparable property in Vancouver.

Tip #5:  Investment Realtor = Investor

Always work with a realtor who is also an investor with their own real estate investment properties. They will be able to provide you with a comprehensive cash flow analysis and they will already know the types of property that will make money. Therefore, working with an investment realtor will save you time that you would spend doing the research yourself.

Experienced investment realtors also have connections that can benefit you. Oftentimes, they will have a team of investment specialists (e.g. mortgage brokers, property managers, accountant, lawyers/notaries, etc.) who are already familiar with investment properties. This way, you can leverage the skills and knowledge of the investment realtor’s team.


Want to learn more? Contact our team!

If you have read this until the end, then it’s a good idea to call our team for more information. It’s never too early to start investing. If you are here, then you know you are interested and you want to learn more.

You never know what you’ll find out. Contact Point B Investment Real Estate Team today by emailing us at success@pointBinvestment.ca.

We look forward to hearing from you.