When market uncertainty hits, many people try to find a way to safeguard their investments. One of the most attractive ways to do this is by putting money into real estate. Real estate, after all, is more substantial than stocks and bonds – you can touch real estate, and see it. On the other hand, it isn’t a perfect place to keep your money: we’ve all seen the roller coaster ride of property prices in the US to know that it can be a risky choice.
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But if you are thinking of putting some of your money into real estate, here are some of our top tips on how to get your feet wet:
REITs
Real estate investment trusts (REITs) are a great way to get started in real estate investing, but also limiting your investment. REITs are publicly traded companies, so investing in the real estate market through them works like any standard stock. However, because these companies are focused on real estate, you can profit from any gains in the real estate market by owning this stock. Over the last year, the S&P/TSX Capped REIT Index jumped nearly 61%.
Rental Properties
Another way to invest in the real estate market for someone with a limited amount of money is to invest in a rental property. Buying a rental property is a good idea right now with mortgage rates so low, that your mortgage payments will likely be covered by the rent you’ll charge.
There are, of course, lots of problems to going this route, as you can probably imagine: tenants can be unpredicatable and problematic, and you always run the risk of being unable to rent out your property. We cover a few of the issues with rental properties in this article.
Syndicates
If you want to get more directly involved, and you have a substantial amount of money to invest but not enough to, say, buy an office building, a good way to do this is through real estate syndicates. These pool money from several different investors to buy and share properties. The base investment amount for this is usually $100,000 to $250,000.
Real estate investment can be potentially a very lucrative source of income, but as always, it is best to make sure all of your savings are not parked in one investment. Talk to your financial advisor before making any major decisions, and good luck!
Heleen Jacobsen
Broker of Record with InfoMarket Group GMAC Real Estate
www.infomarketgroup.com
