Don’t fall for these bad ideas if you plan on investing in real estate in 2018.
2018 is a new year, which means new opportunities. However, there are a few bad ideas that you should avoid this year.
1. Do not get your information from the media. You probably clicked on this video because of the negative headline, right? Keep in mind that almost every economist, from the Bank of Canada to RVC to the credit unions, expects 3% to 7% growth this year. That is not much of a headline, so the headlines will all be about bad news because bad news sells. Look at economic models to know what’s really going on. Of course, we’ll continue to roll out our educational videos about the actual fundamentals of the 2018 market.
2. Do not speculate on pre-sale condos. If you want to live in these condos, then absolutely go and buy one. Do not put a deposit down expecting to ride a wave of appreciation for two years and then assign your unit for a massive profit. Can it be done? Yes, but I learned a very expensive lesson in 2008 speculating on two beautiful condos in a high rise. I lost a significant amount of money. So invest, don’t speculate.
3. Do not neglect your rentals or tenants. There are over 2,000 rental units coming on the market over the next year or year and a half. If you have a bit of a slumlord situation, then your tenants are going to move to greener grass, so take care of your tenants, upgrade your properties, and keep them full.
4. Do not buy real estate from a place of FOMO (fear of missing out). Don’t buy based on emotion or fear, and don’t sell on greed. Use logic. Understand what you are trying to accomplish, and make the right move for you in this market.
5. Builders, please take it easy on spec homes in the $900,000 to $1.1 million range. I think we have enough in that price range right now. I have one that is sitting unsold. Try something a little more affordable or even more expensive—there are enough new homes in that price range to last us a little while.
"Bad news sells, so pay attention to economic models and our educational video."
6. Don’t buy something that is a turn-key rental property. Look for mismanagement; that’s where the opportunity is. Look for low rents or deferred maintenance. That’s where you can force appreciation by improving the property and increasing the rent. That is how you truly get rich.
7. Do not buy a rental property with a negative cash flow and expect to see returns. In 2018, homes should appreciate by 5% to 7%, but that’s not what intelligent investors buy for. We buy for cash flow and we buy to pay down the mortgage, but we don’t put ourselves in a potentially dangerous situation by buying a property with a negative cash flow and expecting the market to go up.
So, don’t fall for these bad ideas in 2018. If you are interested in some good ideas, reach out to me and I’ll give you a list. If you have any other questions, just give me a call or send me an email. I look forward to hearing from you!