Some people consider investing in real estate as only flipping houses or buying rental properties but in actuality any real estate you own is an investment, even your own house. People decide to invest in all sorts of things but there is no investment in the world larger than real estate.
We have seen ups and downs in the global real estate market and this is no different than any other investment. The main difference between real estate investments and all other types of investments is that people will always have a need to live in a home and/or buy and sell real estate. One of the major considerations about the Saskatoon real estate market is that the vacancy rate for rental properties is very low and our city is growing at an unprecedented rate which puts demand on housing. The vacancy rates have been low here for many years so investing in revenue homes or condos is generally a safe investment as long as you aren’t necessarily looking for a huge positive cash-flow each month.
Some of the different types of investment trains of thought are:
- Home ownership – many people don’t consider home ownership as an investment yet it most certainly is.
- Single family rental – many real estate investors start with this as they keep their own home when a move is required to either another location or a need for a larger home. This can usually be done without a property manager.
- Multi-family rental – this can involve the need to manage many people so it can be a lot more overwhelming than single family rentals. Most first time investors don’t start here as it can be a learning curve.
- Cash flow – This is the type of investment for people who would like to supplement their incomes by getting more rent than the investment costs on a monthly basis. These types of investments can be hard to find but even if they are netting a zero to begin with once the mortgage gets paid down and rent levels increase over time you should, in theory, see a positive cash flow down the road.
- Equity growth – This type of investment you are mostly using the rental income to help subsidize the mortgage payment.
- Fixing and flipping – This type of investment is generally only beneficial if you are able to do a lot of the work yourself as if you are paying a contractor the earning potential drops. When investing in a fix and flip type property you will want to ensure that you are not locked into a mortgage as the payout penalties can be extremely counterproductive.
- Real Estate Investment Groups – this type of investment usually involves a smaller investment with more people and also involves someone to manage these investments. One advantage of this type of investment is minimal income loss if a unit is vacant for a month but it also generally nets less financial gain as it is a smaller and often safer investment.
- Buy Below Market – this is the most ideal sort of real estate investment but also very difficult to impossible in an already strong real estate market such as Saskatoon. This type of investment can involve taking a chance in a market that others aren’t yet comfortable in taking a risk in. This type of investment can also be good for investors with a keen sight for upward and downward trends as every market will eventually recover from large drops in value so this investor relies on timing and being able to wait the trend out.
Like many other areas we experienced a lot of ‘spec buyers’ in 2007 which drove the Saskatoon real estate market upwards and, like many other markets, we saw these investors pulling out of the market in 2008-2009 which meant a higher number of listings therefore a decrease in home prices. In the years that followed we have had a moderate year over year increase in the average home sale price in Saskatoon and this is driven by our economy…not speculation. The Saskatchewan economy is becoming known world-wide so if you ask “why would someone invest in Saskatchewan” my answer would be “Why not?”
If you are interested in learning more about the Saskatoon real estate market or in purchasing anywhere in Saskatchewan email me and I will be happy to help you out.
Saskatoon Real Estate Agent
Century 21 Fusion