What Is The Best Type Of Real Estate To Invest In?
This article is a continuation of our real estate investment series of blogs (you can find the other articles here.) We will explore how to efficiently, and simply compare investment opportunities, to make better investment decisions.
Start by comparing which neighborhoods have the best investment returns.
Before you look at any properties, you want to settle on a few areas and make sure they have healthy vital signs. That means, strong population growth, good jobs market, established or growing neighborhood amenities (is there a university nearby? New infrastructure or good nearby transit?)
The wonderful thing about figuring this part out is that it is incredibly intuitive. If you know the neighborhood you are considering, you likely already have a good idea of what the market trends are
What kind of investment property is right for you?
Next, you should consider what sort of properties interest you, and make sense in the neighborhoods you selected above. Are you a hands-on person that can stay on top of bookings, and cleaners? Is there a lucrative tourist attraction nearby (ideally with year-round appeal)? Maybe the inventory of detached homes is low and there is limited space to build more (see North Vancouver house market) in which case holding a long-term rental that pays for itself while rapidly building up equity. The wonderful thing about figuring this part out is that it is incredibly intuitive. If you know the neighborhood you are considering, you likely already have a good idea of what the market trends are, and what sort of properties will likely perform best. Once you have that, the next step is checking your hypothesis with..
Analyze and rank multiple properties with a spreadsheet
Now the fun part! I have developed an easy to use real estate analysis spreadsheet that calculates capital appreciation, principal paydown of mortgage, and cashflow after calculated expenses automatically, and then ranks the properties for you, making real estate analysis easy!
After inputting as few as 5 data points (downpayment, sale price, rental income, maintenance cos and taxes) at a glance, you will see how much principle you pay with your mortgage, and your total return for cashflow and principal pay down with optional input for expected property value growth. Color coded grading will be automatically applied based on target ROI you set (see slide 1).
Get The Spreadsheet Sent To Your Email!
Top 3 types of real estate that are red hot in 2021 in Vancouver + BC
- Low downpayment pre-construction developments – Expect an article explaining why this is so powerful, soon!
- Air BnB (in allowed places like Whistler) – YES 2020 was challenging, but I’ve still seen $20k+ net income in 2020
- Long term rental condos – With interest rates at incredible lows, condos in low vacancy places like Vancouver are a great buy.