Buying and holding real estate is the easiest way to build your wealth. What could be more simple then buying a well priced property and renting it for 20 years and then selling it? Or even better keeping it and cash flowing monthly. Edmonton/Sherwood Park is no different then any other city for buying homes. You want a good buy in a good neighborhood. Or even better in an up and coming neighborhood. A great agent with experience in investing like myself will go a long way. Negotiating, statistics and legalities all come up. This is the easiest way to invest but it can be tricky and complicated if your not 100% sure of what to do.
What Should I Look For?
That is not an easy question to answer. What you want is something that at least cash flows about $100.00 dollars a month. Why? You want to put that aside for repairs and maintenance. You want to buy a home in an up and coming community or the best community you can for the least amount of money.
Finding a listing that has a legal suite is also ideal. Add a garage to this and you now can rent 3 separate pieces of the same residence. This can make it easier to cash flow positive. When doing the long hold strategy you want to think into the future. The Capital Region, for instance, has oil, beef, manufacturing and many other sectors of industry. Make sure wherever you're buying that you look at what the city/town will look like in 20 years. Same goes for the community.
What is Debt Servicing?
This means that you are taking a loss monthly, maybe a couple hundred dollars. You do this for a short while until you can raise your rents high enough to cover costs. This is not ideal but to get into your first or second home, you might have to consider it. But if you weigh out the year or 2 of debt servicing your doing to the amount of money you will get when you sell. It makes sense. People do this all the time.
Next thing to do is find an agent. Some of you might hesitate. Some might have had a bad experience. You do not pay an agent to find you real estate, just to sell. Since you're only buying it is priceless to have someone that knows the market, communities and process. This saves you a lot of time and makes sure you do not make any costly mistakes. The only warning is that you should find someone that is great at their profession and has experience in investing. That one person should have lenders/brokers/inspectors and what not at his disposal. This will save you a lot of headache and time. Make sure you find an agent that you trust and have a similar outlook.
What if the Economy is Bad?
It does not matter. Here is a chart to show you how much property has increased over the past 20 years or so. The yearly percentage in Edmonton over 20 years is actually 7% but we will leave it at 5% for simplicity. And remember, leverage. The reason your return on your investment is so large is because you can loan 500,000 by just putting down 50,000 or even less. Ask your stock broker if he will borrow you 500,000 if you give him 50,000. Without major risk to you. In real estate you can use very little of your money to get a loan for a lot of money. This is leverage.
**Note: Inflation was not added due to simplicity and to show straight numbers. With inflation these numbers would be in the millions.