The ever nagging question: How is the real estate market in Toronto? We're all confused as we are barraged with news from two sides - one camps says the GTA real estate market will crash and the other that says that it will remain stable or even grow.
Regardless of how the market will go, there is no harm in heeding advice from some experts, one from a leading real estate lawyer, from Mark Weisleder, whose article appears in the Toronto Star.
Whatever your view, he says, he'd like to share some ways to reduce your risk, whether you own a home or investment properties:
- Pay down your mortgage: Increase your monthly payment. Even a little makes a difference. The more equity you build, the bigger the cushion if prices go down.
- Lock in your interest rate: There have never been a better time to lock in your interest rate. Three years are 2.84% this week and 6-years at 3.59% This cuahions you from unexpected rate or price swings.
- Cover your costs: When thinking aobut a real estate investment, do the math. After making the down payment, the rent should at least pay for all expenses on the property. This includes mortgage interest, propeprty taxes, insurance and utilities. Do not invest in real estate that does not carry the expenses. (check out our mortgage calculator on our website www.jonamantesells.com) For most investors, putting down 20% - 25% will mostly assure you that the rent will cover your costs.
- Share your risk: Consider taking on a partner in any investment real estate. You get some equity out and share the bills and risk. Always get tax advice to check how much you may have to pay as a result of any sale. (We have some models that we've personally used and will glady share them with you).
- Do tenant checks: This is true for commercial or residential tenants. Do proper background checks and get additional guarantees if you are not satisfied with anyone's credit or prior rental history. If you lose your tenant, you will have trouble paying for your expenses.
- Treat your tenants with respect; Your tenants are protecting your investment. If you treat them with respect, they will look after your property better.
We have a few other tips that we would gladly share with you based on our own personal experiences as real estate investors along with those of our clients who are true believers in real estate as one of the most stable investments there is in this ever-changing and volatile global economy. If you have any questions, please do not hesitate to give us a call.