WHERE TO INVEST?

Where to Invest

We apply this checklist for every city
that we plan to invest

1.- Mortage Interest Rate

  • Low mortgage rate keeps the investor's expenses down

  • Allows you more renters to become homeowners; vacancy rates increase

Key Insight:

  • Low-interest rate: Suitable for but, flip and sell
  • High-interest rate: Good for buy, hold and rent

2.- Increase in Average Income

  • Real Estate prices will do the same

  • If the demand for RE increases and and the average income is remaining flat could be beacause the town is attracting retirees. Not good for long terms plans.

Key Insight:

  • Focus on: Towns were income, and retail sales are increasing at a higher rate than the provincial average
  • Rule of thumb A well-balanced market has a Housing Affordability Index of about 33% (25% -39%)

3.- Increased In-Migration and Demand

  • Increase jobs or easier access to jobs

  • Increase could be driven by speculation

Key Insight:

  • Focus on: Watch for major announcements of new jobs or major new business moving to an area. Average higher than provincial.
  • Rule of thumb Increase in jobs drive a future increase in demand

4.- The Ripple Effect

  • When an specific area has a boom in prices, the real estate in the surrounding areas follows

  • Not all the neighbourhoods or towns will be affected by the ripple effect

Key Insight:

  • Focus on: Towns or neighbourhoods where values are already increasing dramatically or redevelopment is occurring
  • Rule of thumb Look areas near towns or neighbourhoods with high increasing values that has not yet a major impact

5.- Local, Regional and Provincial Political Climate

  • Local political authorities enhance business-friendly environment with minimal taxation (both income and property) and with a fair landlord and tenant law structure

  • Less attractive province or town to new industries and jobs growth by increasing taxes at all level of government

Key Insight:

  • Focus on: Small towns and cities that are actively promoting themselves to the world
  • Rule of thumb: Watch for areas that are attractive to business because you will find these have strong long-term potential

6.- Transportation Expansion

  • Transportation➡ accessibility➡ population inflow higher demand increased property values lower vacancies

  • Distance is no longer measured in kilometers, but in minutes. Commuting and access times are critical to a town's fortunes

Key Insight:

  • Focus on: Transportation projects that already start, do not buy on the announcement
  • Rule of thumb: Reading major and local newspapers every day pays off

7.- Areas in Transition

  • Neighbourhoods that are moving up from one economic class to the next; this trend to be alder areas that are rediscovered and redeveloped.

  • Sometimes neighbourhoods that seems to have transition potential never sustain a long-term transition.

Key Insight:

  • Focus on: The area you are buying have a tougher tenant profile and lower-than-average, both will improve and the values will increase as the transition progress.
  • Rule of thumb: Never be the first into this area.

8.- Creating Highest and Best Use

  • Your opportunity lie in finding properties that are not being maximized and then changing their use

  • There are just a small number of them that allow the opportunity to change the use

Key Insight:

  • Focus on: Providing quality housing to the tenant, while at the same time maximizing the income generated by the property (e.g. renting out the unattached garage separately)
  • Rule of thumb: Make sure you have the expertise and funds to complete the change you are contemplating

9.- Buy Wholesale; Sell Retail

  • Very profitable, buy a multi-unit building, turn it into condominium, sell them individually

  • Takes a unique talent and deep pockets to get started

Key Insight:

  • Focus on: Areas where already occurring, then take advantage of the ripple effect
  • Rule of thumb: All of your costs are up front and your return is derived only from the sale of the property

10.- Quality Marketing

  • Can get higher-than-market rents and values for the property

  • Poor marketing could get you 5% to 10% reduction value in your property when you are selling or renting

Key Insight:

  • Focus on: Using a proven marketing strategy in order to attract the type of buyer, seller or renter you want
  • Rule of thumb: Marketing allows to maximize the income, minimize the purchase price and maximize the selling price

11.- Renovations and Sweat Equity

  • Do not have a lot of working capital, but have time and expertise

  • If you do not understand which upgrades give you payback could be a waste of money

Key Insight:

  • Focus on: Properties in areas that are showing an increase in pride ownership that need touch-up renovations non-structural improvements that have immediate impact on the appeal of the property
  • Rule of thumb: You are ultimately trying to appeal to the renter or buyer, not yourself, keep the work simple

12.- Speculation: The Secret Tip that Turns Out Not to Be So Secret

  • Can be a very profitable business, as long as you know what you are doing and you are armed with facts, not rumors

  • People buy based on greed, and this emotional behaviour drives up the values

Key Insight:

  • Focus on: You have to rode the wave, so the speculation pays off as the values go up and stay strong
  • Rule of thumb: You need very deep pockets to speculate well, and the bottom line is that you can make much money

© SERENITY BUSINESS FACILITATORS INC.

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