6 Common Mistakes Real Estate Investors Should Avoid
Investing in properties in Toronto or the GTA region is a good opportunity. People who haven’t invested in real estate before might think of it as a daunting process. Finding the right location and property are significant factors when looking to get a return on your investment.
Many common mistakes will make the real estate investment experience not so great for investors. Experienced real estate agents will be able to guide investors to the best condos for sale in Toronto and the rest of the GTA region. Here are a few common mistakes to avoid when investing:
1: Not Paying Attention to Aging Listings
Typically, buyers will sort listings by time. Listings that have been up for a month, two months, or more often get overlooked by potential buyers. However, that might not be the best strategy when looking for an investment condo for sale in Toronto or any other property anywhere in the GTA region.
Some reasons why the property has not sold quicker can include:
- It was not staged well or not staged at all.
- Pictures of the listing are unappealing.
- It needs some work to make it in perfect condition.
- If the property was tenanted and the tenant left the property in bad conditions
Honestly, there can be so many reasons why properties don’t get sold quickly. However, investors can find perfect properties at prime locations if they can look past these factors.
2: Assuming a 20% Downpayment Is a Must on Property Purchases At Once
If you are looking to buy resale condos, single family homes, and towns for investment purposes then most likely you will be required to have a 20% downpayment at once. However, resale units are not the only option for investors. Another option is pre-construction condos for sale in the Toronto market, or other parts of the GTA. With pre-construction units typically having the downpayment split into a deposit structure collecting payments in installments. This eliminates the need for having that downpayment at hand.
For example, a builder may request you to put a 20% deposit on the purchase price by breaking it down into 4 payments of 5% each, respectfully. You may end up paying 15% of the purchase price within a 2-year time frame from the day you sign the contact, and the remaining 5% due on the occupancy. However, this deposit structure and time frame of the deposit structure varies builder to builder, this is just for educational purposes. If you would like to learn more about this, then feel free to contact us.
Also, the pre-construction market is heating up across the GTA region. To comply with the demand, there is construction going on in various parts of the city.
3: Ignoring Ontario Rent Control
Residential properties that were built after November of 2018 don’t fall under the Ontario Rent Control. Most condos, basement apartments, and residential properties that get occupied for the first time after November 15, 2018, are exempt from rent controls. This means that there is no limit to the year-on-year rent increase for such properties as long as it’s fair to market value. At the end of the day, it comes down to what the investor is looking for in their property. Do they want to purchase an older property with rent control or purchase a newer property that won’t have rent control.
4: Using Traditional Buying Tactics in 2023 and Beyond
Of course, the basic and the oldest way of finding the best properties is to scour through listings. And yes, there can be many listings. However, up to date and experienced real estate agents will have innovative ways to find the best deals. Whether their clients are looking for assignments, ready to move in, or new pre-construction properties. Their agent will be able to find the best property according to their personal and financial objectives/requirements. Also, a well-connected real estate agent would be connected with local builders and sellers. Many properties don’t get listed on platforms like MLS and others.
5: Expecting to Make Lots of Money Super Quick
Of course, investing your money is all about getting a return as quickly as possible. However, the property industry is more about parking your money and safeguarding it. You will get quite attractive markups provided you invest in a solid property at a good location. However, it will be a waiting game.
Yes, in some cases, you will see that odd deal working out so well for an investor. Some condos for sale in Toronto will get resold in only a short span of time. However, this is not always the case. Most of the time, investors will have to be patient when looking for markups.
Also, the market can change in a heartbeat. The next rate hike might be quicker than everyone is expecting at this point. So, be a smart investor and think long-term.
6: Not Working with Experienced Real Estate Agents
There are different types of properties for sale. Move-in-ready condos for sale in Toronto are different than investment opportunities from pre-construction condos. Also, different real estate agents will have different levels of expertise in different types of properties.
Ideally, investors should work with realtors who are more experienced in selling investment properties. Typically, these types of agents will have direct contact with builders and developers. As access to the right people is necessary in this industry. Experienced agents who mainly sell investment properties will know who to call when looking for a long-term investment. Also, they will be able to guide clients to buy the best properties that will likely appreciate in the years to come.
With the constant rise in population, new properties are being built around the GTA region. New condos for sale in Toronto and the rest of the GTA area provide investors with a variety of investment opportunities. Also, pre-construction condos properties are usually the right ones when it comes to long-term investments.
Make sure to have the right real estate agent on board. Trust Condos team is experienced and up to date real estate agents in Toronto. Our agents services have helped investors over the past decade to buy the right properties. Also, the best time to invest is now.
The information on this blog is based on our experience. Readers/Users are strongly recommended to obtain independent property, mortgage, legal, tax or accounting advice. The information displayed is for reference only and is without any representations and warranties.