Top 5 Investment Strategies for Barrie Real Estate Investors
There are many different ways to invest in Barrie real estate. As with any investment, the opportunities range in complexity, risk level, and ease of entry. Which should you choose? That depends on your personal financial situation, access to financing and risk tolerance.
The top 5 investment strategies for Barrie Real Estate Investors are…
- The “Buy and Hold” strategy
- The “Flip”
- The “Hybrid” – buy, fix up, and hold
- The “Joint Venture”
- The “Rent to Own”
1. The Buy and Hold
The strategy for ‘Buy and Hold’ is simple: buy a rental property that is slightly under market value and hold it for the long term. The goal is to have tenants gradually pay off the mortgage so that in the end you have a property that is mortgage-free and on which rental income is being paid to you indefinitely. Buy and Hold is a popular option, because it is one of the most straight-forward real estate investment strategies.
2. The Flip
The Flip is a popular strategy that has been the subject of many television shows in Canada, the United States and beyond. In concept, the flip is simple: buy a home significantly under market value, renovate it, stage it, and then sell it for a profit. If done correctly, the rewards can be significant. The key to success? Ensure that you factor in all your financing costs when calculating the expected profit on your Flip.
3. The Hybrid
The Hybrid strategy is a combination of the Buy and Hold, and the Flip. Most Hybrid strategies start with the purchase of a property that is undervalued due to the fact that it needs a fair amount of renovation or care. The property is then improved with the intention of holding it for a longer term and renting it, before ultimately selling when the market is favourable.
4. The Joint Venture
Many investors who don’t have (or don’t want to tie up) funds in purchasing an investment property on their own, will team up in a partnership with someone with the same investment goals. In a joint venture it is vital to have absolutely everything in writing before any money changes hands. You should outline not only the initial financial expectations of each party but also things like:
- how you’ll decide when or how to do repairs or renovations (and who pays for them)
- how you’ll select tenants and who deals with them (if applicable)
- when you intend to sell and based on what criteria
5. The Rent to Own
The way it works: Investors purchase a property, but rather than advertising it as a traditional rental, they look for future owners. These are typically people who want to own their own home, but can’t, because they either have credit issues or an insufficient down payment. From an investor perspective, you would negotiate an agreement to have them purchase the property at a predetermined price, by a predetermined date. In addition, an “option fee” of a few thousand dollars is typically charged to secure the property. For a predetermined length of time (usually 2-4 years) market rent is charged, plus a predetermined amount is charged on top of the rent, that goes toward the tenant’s future down payment.
Now you are armed with some basic information on the most popular ways to invest in Barrie real estate. For more information please contact the BarrieInvesting.com Team today!