Ottawa is a city with a thriving real estate market. The market has appreciated over the past years and has yielded significant financial gains for investors. However, investing in real estate does carry its share of risks and disadvantages. As such, all real estate investments should be carried out systematically and carefully to mitigate loss.
The team at My Ottawa Agent would like you to know the best ways to invest in the Ottawa real estate market.
Buying Rental Properties
Acquiring properties that you then lease/rent to tenants or businesses is a great way to earn a steady income stream. The income stream can help you pay off the mortgage on the property. Rental properties also tend to appreciate in value as time goes by.
The downsides with this approach are quite significant though. As the landlord, maintenance of the property and finding tenants are your responsibilities. A DIY approach can help mitigate the costs of maintenance but you will be liable for any further damage due to your actions. Without enough tenants, your cash flow becomes very limited and the mortgage becomes a bigger burden. Also, you must comply with the Ontario Residential Tenancies Act or you will create legal troubles as well.
Fix And Flip
Another great way to leverage an investment property in Ottawa would be to buy a property, make improvements on it, and sell it for a higher price point. Flipping properties can prove extremely beneficial, especially if you refinance the property with the bank. This way you can keep the refurbished property and recoup a significant amount of the money that went into the purchasing and renovation.
To maintain profitability with flipping properties, you need to stay on top of your budgets, your renovation timeline, the terms of your loan, etc. It is a very complicated process and small mistakes can create bigger ones down the line. Also, if you can’t find a buyer for the property soon, you will have to continue paying for the mortgage and that will increase your losses. Flipping properties is usually best left to those who have experience in the real estate market.
Real Estate Investment Trusts
A real estate investment trust (REIT) can add real estate investments to your portfolio without the need for traditional transactions. REITs are created by companies or trusts to acquire and manage income properties through investor funding. Like other stocks, REITs can be traded on major exchanges.
This investment allows for a steady income and allows you to enter the kind of Ottawa investment property (malls or office buildings) that individuals cannot manage. It is a reliable investment however, the typical leverage that the real estate market affords is unavailable with a REIT.
Through the internet, real estate investing platforms can connect you to other like-minded individuals who want to invest in big real estate deals. This leverages the power of crowdfunding to gather capital and reduces the amount you will have to put up for the investment. As such you can make investments in numerous projects without a significant drain on your finances.
These platforms require additional fees to manage the investment and the platform. Also, the cash flow from these investments can prove to be rigid as approval for returns tends to take a while. This results in periods where your returns are locked up until the approval comes through.
My Ottawa Agent – Commercial Real Estate Investments and Leasing
With the above methods, investing in the real estate market in Ottawa should prove to be a reliable and successful venture. Beginners and seasoned investors can make generous returns on their investments if they take reasonable steps and try to mitigate risks as much as possible.
Of course, a real estate investment agent can facilitate the process and help you find reliable opportunities easily. Please contact us if you are looking to make any real estate investments. My Ottawa Agent provides more than 16 years of experience in real estate investing. Our agents are experienced with extensive knowledge of the Ottawa real estate market and are prepared to help you navigate every transaction to get the best deal possible.