In the previous 3 instalments of this investment blog we covered a lot of material – everything from the money, to the time, to the experience required for any given real estate investment. This week, we will wrap things up by quickly touching on the importance of being realistic with the constraints of your “handyman” skills, as well as some overall final thoughts about the big decision.
Renovation Skill Set:
Although we have already highlighted your ability to fix general problems in a rental property as a real asset, let’s touch on this topic in brief before wrapping things up. It is always worth assessing how handy you are as a Landlord because your reputation is everything (especially in commercial) and rates of return can be diminished in short order if repairs are not completed cost effectively. If you get the reputation as a Landlord that does not address issues in a timely fashion, word of mouth will spread quickly and then good luck finding a Tenant next time you have a vacancy. Similarly, if you are unable to address an issue with your own skill set, every time you have to pay labour to a contractor, HVAC specialist, or locksmith, you have just chipped away a little bit, or a lot of your profit. Therefore, be aware of what owning a specific type of property entails because numbers can be deceiving. You may be better off in the end with a low maintenance 5-cap condo unit rental, than an 8-cap detached, single-room student rental once you have accounted for all associated expenses. Don’t forget, there is a value to time, whether it be spare time to relax, or the opportunity cost of the time you could have been doing something else lucrative.
Overall, if you are in a position to begin investing in real estate, you should be proud of yourself. It takes discipline to save money and the right mindset to jump into the world of real estate investment. This article should aid in your thought process in terms of what is available, what to expect, and what is best for you. If you are a first time investor with a small downpayment, medium to long holding period, low capital reserves, not a lot of spare time, and are not the handiest individual, then a condo could very well be the best investment for you. On the other hand, if your a seasoned investor who has a couple of student rentals and is sick and tired of all of the headaches, you may want to look into your first small commercial investment property. In the end, you want the money that you have worked so hard to save, to grow. Therefore, do yourself a favour and speak to a professional when it comes to your financial future!