For years, real estate experts and financial advisors have loudly proclaimed the benefits of investing in real estate. Not only does it allow you to generate income from your home — even your private residence if you choose — but the equity gains can be significant over time.
After the hot, hot, hot pandemic market was followed by a downturn that remarkably did NOT result in significantly lower housing prices, many potential real estate investors decided to take a step back. Generating cash flow is not as easy as it once was due to high interest rates on top of the high prices of houses. And who hasn’t heard of the horror stories some landlords have had to put up with over the years?
All of this may cause you to wonder, is real estate even worth it anymore, or are you better off buying stocks or investing in REITs? In this post, we’ll take a cold, hard look at the facts so you can make an informed decision about what is best for you.
No One Seems to Care About Landlords
When you review the Landlord and Tenant Act, you’ll quickly see that most of the rules and guidelines are there to help tenants — not the homeowner. Some of this is understandable, especially given the housing shortage so much of the province is facing.
However, landlords are starting to feel like they’re getting the short end of the stick. Even if your tenant is late with their rent, the eviction process can be long and drawn out.
On top of all of this, landlords are often portrayed as greedy villains in books, TV shows, and movies. Fiction loves to portray investors living in the lap of luxury while charging a fortune for tiny, cramped, and run-down apartments.
In reality, most real estate investors are just regular folks who cashed out their equity on their primary residences to buy a second property. They are often carrying that income property at a breakeven or even a loss in the hopes of building their equity over the long term.
They’re not charging high rents to get rich—they’re charging what they need to cover their mortgages and expenses. When housing prices and interest rates skyrocket, it becomes more difficult than ever to break even as a landlord, never mind get rich.
There are more opportunities in real estate than you may realize, and you don’t always have to be a landlord. Learn more in the posts below:
- How to Generate Passive Income From Your Primary Residence
- Growing Your Wealth Through Real Estate Even in a Recession
- A Complete Guide to Real Estate Investing in Guelph
What Happens if Small Investors Leave?
Many small real estate investors are already tired of being landlords and are leaving the market in record numbers. Many of the new listings you see are actually investors cashing out. What happens if a substantial number of these investments leave? In that case, many available homes will be scooped up by corporations and big investment companies.
All of this could spell the end of the small, mom and pop investors that make up the vast majority of landlords in today’s market. This scenario will not be advantageous for anyone, landlord or tenant.
- Tenants will no longer benefit from a close relationship with a homeowner who actually cares about the home and the person renting it. Instead, any issues will get passed onto large property management companies.
- The laws may currently be skewed in favour of tenants, but can we trust that large corporations will play by the rules? These companies can afford skilled lawyers to find any and every loophole that may exist.
- Investment companies with deep pockets buying up multiple properties will cause housing prices to spike for everyone. Rental costs will not be far behind.
Small Investors: Canada Needs You
As much as people may love to portray landlords as evil, mustache-twirling villains, the truth is that we need more small investors to step up to the plate. Not everyone can afford to buy a house and not everyone wants to. Buying real estate is a life changing event, and it’s too big a step when you’re living somewhere temporarily and are not yet sure where to put down roots.
The demand for housing of all types has never been greater all over the country. Canada needs to build a lot of new houses fast. But that won’t happen without investors because construction takes time and a huge amount of money upfront.
These funds to upgrade our infrastructure come mostly from real estate investors. We can have a few mega corporations controlling everything. Or the vast majority of rental homes can be owned and managed by regular people who have a personal and financial stake in the property. In either case, large-scale housing projects would not be possible without investors.
Looking for even more support to succeed with your investments? The posts below are a great place to start:
- Five Best Cities in Ontario to Buy Recession-Proof Investment Properties
- How An Experienced Guelph Real Estate Team Can Help With Your Investments
- Questions To Ask Potential Property Management Firms
Succeeding in the Market Today
High interest rates are currently scaring off some smaller investors. However, real estate is still one of the safest ventures there is even with all of the challenges in the market today. Simply put, the more properties you own, the more your equity will grow over time.
The key is to find an income property you can carry at a breakeven point or even earn a little profit. The following tips can help you avoid potential problems and enjoy a relatively stress-free investor lifestyle:
- Work with a local real estate agent to find a property with positive cash flow potential.
- Contact a mortgage broker to assess your resources and arrange financing ahead of time.
- Reach out to a property management company if you feel you’re not up to becoming a landlord.
- Get familiar with the Residential Tenancies Act so you are clear on your rights and responsibilities.
- Take it one step at a time, and remember that expert advice is always a phone call or email away.
With many property owners leaving the market, more opportunities are opening up for small investors like you. Your decision to invest in real estate doesn’t just help make your city a better place; it can set you and your family up for financial security and peace of mind.
Do you have questions about the challenges and benefits of investing in real estate today? Our experienced experts are always happy to lend a hand. Reach out today to info@gowylde.ca or call 519-826-7109 for more information.
