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Investing vs Flipping

Posted by [email protected] on April 20, 2020

In the current market condition, people now more than ever want to take control to ensure that they have a secure future.

I believe that one of the best ways to guarantee your financial independence is by developing a real estate portfolio.

Although there will always be price fluctuations in the marketplace, investing in real estate has proven to be one of the safest long-term investment strategies.

What is an investment property?

Real estate market is dramatically changing and one has to adapt to the changing market to get the best results. In the late 1990s, investors started buying property and only held on to them for a few years. They were capitalizing on rapid appreciations in the housing market.

This investment style is known as flipping.

While this was – and to a degree still is – a popular strategy. I don’t think it fits with today’s current market conditions.

Flipping is extremely risky and is basically gambling in the real estate market. I would never recommend gambling with your hard earned investment capital.

I believe the key to building long-term wealth is by looking for value investments and creating a diverse real estate portfolio.

For people who did it right, flipping created good short-term gains. However, I don’t think these types of risks are worth it, especially when there are better options.

Think long-term!

My next door neighbour bought rows of townhouses in the 1980’s. Those units are now paid off and the monthly rental income now is generating a significant income for my neighbour. He is in his late 50’s and is retired. I have seen similar example in my own family.

Starting early and consistently building your portfolio with new properties is the best way to build long-term wealth. As your mortgage decreases you will start to earn on your investments.

Not only does rental income provide a stable return on your investment but property values consistently increase so you will always have a secure asset. I believe that this option is a much better alternative to gambling in the real estate market.

Finding value in pre-construction units

The reason why I specialize in the pre-construction market is because of the opportunities for developing long-term profitable investments.

These units are sold at discounted prices during the VIP launches, which mean you have the opportunity to see a better return on your investment. Being one of the first investors in a condo unit allows an investor to have their pick of units instead of having to conform to the marketplace.

The following are some features to look for when developing your portfolio:

1. Convenience – Properties close to shopping centers, parks and restaurants are major selling feature for renters.

2. Atmosphere of the neighborhood – The more vibrant the area the easier it will be to find potential renters. Universities are always great areas to look for investment properties.

3. Access to public transit – This is a major selling point for renters who probably don’t have access to a vehicle.

4. Building Facilities – A Modern and stylish building with top-of-the-line amenities could allow you to charge a higher rent, which would increase your return on investment.

5. Best Value – Purchasing a unit at a best possible price, lower than the comparable projects in the area is a key. It could be achieved either by buying at a VIP Agent launch or at a project where the VIP Agent has a special deal with the builder known as “bulk deal” in the marketplace.

As per Sunny Batra -fellow realtor & colleague

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