Real estate property is an asset class that plays a significant role in many investment portfolios and is an attractive source of current income. Private real estate has increased significantly over the last 20 years in Toronto GTA.
Data from the Canadian official count or survey of a population (Census) showed that the proportion of Canadian households who owned their home fell from 69.0% in 2011 to 66.5% in 2021. In Ontario, the Canadian Housing Statistics Program (CHSP) data show that more than 20% of owners were investors in 2020.
Residential real estate is probably the most widely known and understood type of real estate investment. There are many different types of residential real estate investments from bachelor apartments to multi-units building.
Types of Residential Real Estate Investments
Since residential real estate investments can be of various types, let’s review a few of your options.
Long-term Rental Property:
If you’re thinking of investing in a property, a long term rental is an efficient way to produce consistent, positive cash flow. This property can be anything from a multifamily home with up to four units to a small, single-family home that you buy with the intention of renting out to tenants. It comes with a range of benefits and once you know how to begin, it can offer a more reliable stream of income than its short term rental counterpart
Vacation Rental Property:
Vacation rental or short-term properties are accommodations that travelers can rent on a short-term basis. In real estate, a vacation rental is seen as a hospitality rental strategy that is turn-key and fully furnished to those that require a bit more effort. In Ontario, this period can range from 1 to 28 days depending on the landlord or the property management company. This can be more work-intensive residential real estate investments because you or the property manager should upkeep the home between guests. In recent years, short-term rental platforms like Airbnb give services to this type of business and you can place your vacation property on these platforms.
Flipping Property:
Flipping a property is one of the most active investments. You buy a property below market value but it needs work and you put in the time and work needed to bring it up to standard and then sell it. Flipping houses is risky. Not only are you investing a lot of your fund, but you’ll need to have the capital for any unexpected problems that come out.
Micro-flipping:
If you’re interested in real estate investing, you may have heard the term “micro-flipping” floating around. You buy homes that are sold for less than their potential market value and then quickly resell them, usually without major repairs. This is less profitable than traditional flipping but is also less risky and cost intensive.
Accessory dwelling units:
Additional Dwelling Units are extra living spaces on your property that you rent out to a tenant. It is also known as ADUs, Second Units, accessory or basement apartments, secondary suites, carriage houses, laneway suites and in-law flats are self-contained residential units with kitchen and bathroom facilities within dwellings or within accessory structures.
For example, within a detached garage. Operating an ADU is typically less cost-intensive than managing a separate property and can be a good option for generating some extra income from your current property.
Real estate appreciates in value over time. If you buy a home, especially at a discount, make repairs and then sell or rent it later, you’ll make a decent return on your investment. There are also tax benefits to investing in real estate, including tax deductions, depending on your income level.
Managing real estate yourself can be time consuming, performing various landlord duties such as collecting rent and overseeing maintenance can eat up your time. At zoodpm, the property management company in Toronto run by engineers. Our clients enjoy a premium property management experience without paying a premium price.
Zood Property Management is designed to provide our clients reliability and performance. Please contact us at 647-985-ZOOD (9663) for a free consultation.