Since the start of the pandemic, Canada’s housing market has seen a steady uptick in growth. Last year, the housing market in Canada’s 11 major cities saw an increase of over 8%. Right now the real estate market is hotter than it’s ever been.
Interested in making real estate a part of your business? You’ve come to the right place. Read on to learn more on how to get started in multi-family real estate investing.
The Different Kinds of Real Estate
If you’re new to investing in real estate then you may not know that there are a few different kinds of real estate. When you a purchase a property it is typically either single-family or multi-family. Let’s take a look at what this really means.
What is a Single-Family Property?
A property that is considered single-family has one housing unit, one kitchen, and shares no walls or utilities with other adjacent living units. Owners of single-family properties also own the land the properties stand on.
What is a Multi-Family Property?
A multi-family property is a property that has more than one or several housing units. These units are often built side-by-side or on top of each other. Some examples of multi-family properties are apartment complexes, townhouses, condominiums, and duplexes.
What are the Advantages of Multi-Family Property Investing?
Multi-family properties bring with them many benefits for an investor.
For one, investing in multi-family properties has huge income potential. Unlike with a single-family property, you can lease multiple living units at once. This means you will have several sources of income coming in from just one property.
Should you decide to live in one of the units of your multi-family property, the rent from all of the other units will more than cover your costs.
Vacancies are also far less likely to be an issue compared to single-family properties. This is because you will not be reliant on a single tenant to bring in rental income.
How Multi-Family Real Estate Investing Works
All this talk about the benefits of owning multi-family properties is great, but how exactly do we break into this market? Let’s take a look at a few steps for getting started.
Understand the Basics First
If you’re new to real estate investing altogether then it’s a good idea to become acquainted with the basics of real estate. This means getting familiar with and understanding relevant terminology, local and national rules & regulations, and so on.
It’s also a good idea to understand some of the common pitfalls you may experience when getting started on your journey.
Develop a Strategy
There are a number of different rental strategies that can be implemented based on the type of properties you are looking to rent out. In the case of multi-family real estate, your strategy should be developed around either long-term rentals or short-term rentals.
Rentals are considered long-term when tenants lease a living space for 6 months or longer.
These rentals require a longer time commitment from both tenants and landlords. As an owner, you’ll be responsible for more units at a time than if you owned just single-family units. You will also likely need a bigger emergency fund for your multiple living units.
Develop a long-term rental strategy if your desire is to have consistent income with a low vacancy rate.
Rentals are considered short-term when tenants lease a living space for 1-6 months.
Short-term rental properties command a higher rental income because they are extremely popular. They also require less commitment on the part of both owners and tenants. However, short-term rentals are volatile and can be subject to a high vacancy rate.
Develop a short-term rental strategy if you’re buying properties in tourist destinations like Toronto, Vancouver, Quebec, or Montreal. Tourist destinations will reduce your likelihood of dealing with vacancies and attract the highest quality tenants.
Get Started on Your Journey Today
Real estate investing has the potential to give you and your family financial freedom. Consider these tips before getting started on your real estate investing journey.
Are you interested in creating a real estate business that will give you financial freedom? Contact us today to get started!