A growing number of people are discovering that the Nanaimo real estate market is a great place to buy an investment home but aren’t sure how to start. Here are three frequently asked questions about buying an investment home in Nanaimo.
Buy & Hold vs. Fix-And-Flip
Which is better?
The answer to that question depends on your investment personality and goals.
Some real estate investors buy for the long term. They hold their rental property for years, enjoying the monthly cash flow and the appreciation of their investment. They are what’s known as a buy & hold investor.
On the other end of the real estate investment spectrum is the fix-and-flip investor. These are people who search for property that has a lot of deferred maintenance or needs a large amount of updating. Fix-and-flip investors purchase real estate like this at a below-market price, put money into repairs and upgrading, then resell the home only a few months after they bought it.
The buy & hold real estate investor is similar to a person who buys bonds or the stocks of large companies. Corporate bonds and stocks are generally safe and the dividend income is predictable.
The fix-and-flip real estate buyer is more like a stock market speculator. They try to buy low and sell high, usually within a very short period of time.
Where To Buy?
Buying Nanaimo real estate as an investment is much different from purchasing a home of your own.
One of the biggest differences is that when you purchase a home as an investment, you’re buying it not only for the potential appreciation. You’re also purchasing your investment home for the monthly rental income.
But to generate the monthly rental income you’ve got to buy your investment home where the renters are. Beginning real estate investors usually spend months trying to figure out the best area to buy in.
Deciding where to buy a rental home isn’t as difficult as it might seem. One of the easiest ways to decide where to buy is to look in areas where there are already a lot of people who rent where they live.
Places where there are a lot of apartments or rental condos, and neighborhoods near colleges, major employment areas, and shopping districts are all great areas to invest in a rental home.
There will be a continuous supply of potential tenants to rent to. Plus, having a rental house will give you a competitive advantage. That’s because most renters – especially people with families – would prefer to live in a house rather than an apartment.
Is It Difficult To Be A Landlord?
The answer to this question varies from one real estate investor to the next.
Some of the things to consider before becoming a landlord are:
- People skills – do you enjoy dealing with tenants and vendors?
- Handyman ability – are you alright fixing your tenant’s clogged toilet at 2 a.m.?
- Business & Financial know-how – the reason for buying an investment home is to make money - but do you have the time that it takes to make sure your tenant pays the rent on time, get the best possible prices from your vendors, and accurately track all of your expenses?
If the answer to any of these questions was ‘No’, that’s OK.
It doesn’t mean you shouldn’t buy an investment home in Nanaimo. It simply means that you should enlist the help of a professional. Realtors in Nanaimo who specialize in buying and selling investment homes can provide excellent guidance. They will also be able to recommend a residential property manager who can take care of the day-to-day issues of your investment home so that you don’t have to.