How to avoid risk while making a real estate investment?

Proper planning and execution will result in successful real estate investment in Canada. But there are some unavoidable circumstances which the investor is forced to face while purchasing an investment property. So, here are the few ways to prevent risk.
 

  • Finding a property with low value
    Find under-market value homes for rental purchase and make it up to market standards so that you get better cash flow and less risk is involved. Landlords are willing to minimize the rent when their house is not sold for a long time and he gives up. When the rental amount you charge is moderate, you are out of risk as charging high rent is not good and you may have to face bad consequences later.

     
  • Lower rate of interest
    Over pricing is not good. Lower the rate of interest so you avail increased cash flow, hence leverage risk is reduced. Another strategy is opting for ARM, where owner can fix the time period where rate of interest will be low and cash flow is regular.

     
  • Down payment
    There is myth that high down payment will get you the house first, but at the same time you should not land in debt. Losing out all the money is worst and when one cannot get out of that situation, the investor has to look out for refinancing. In order to avoid that, make low down payments so that cash flow increases.

     
  • Home improvements
    Home improvements are a way to increase the value of the real estate investment in Canada property which in turn you get high profit. The investors can make use of this profit to pay his debt. The home improvements are redesign is made to attract more potential buyers. The rent is increased as and when the renovation and improvements are made. Do not go overboard by spending lot on home improvements, that’s also a risk.

     
  • Location
    Make a thorough research and find the best area that has also scope to increase in the market value in the future. These are termed as hot selling areas. The heart of the city locales are preferred by the millennials as they can purchase everything easily. Buyers look out for all amenities that are close by their home. Not only millennials, even the old aged people cannot travel much, so they also prefer location that has all basic facilities nearby. Avoid the risk of choosing a bad location with high price.

     
  • Under market value properties
    The reason behind choosing a under value property is that, even when market falls, the investor doesn’t lose much. You can always make profit out of under value properties like real estate investment in Canada, for e.g. renovating it and selling it at high price.

     
  • Fore closure and flipping
    Investing on fore-closured properties has both pros and cons. You get better price when you sell is the advantage, but a fore closured property at a bad location is a risk. Flipping is likewise has both pros and cons. It may either hit the market and you become rich or may turn out to be flop.