Buying a real estate can be a lot of work; however, many of the decisions you have to take are financial. This is because buying a real estate is different from just buying a home. For the latter, you need a place to live, but in the case of the former, it is purely business.
Therefore, you need to understand that the decisions you would be taking would be based on the prevailing situation in the market for maximum profit rather than just your likes and dislikes.
Before plunging into the real estate business, it is essential to do a lot of research. One needs to study the market and various conditions which may affect sales which includes location. Homes are more hot selling in certain areas and for example, having condos for sale in Toronto would be better than in a less urban area.
Starting small is an excellent business idea. Buying a real estate is an investment, and like all investments, it comes with a lot of risks. Therefore, for the first time, a low-cost home is good enough for a start. A $150,000 home or less is a good start. Increasingly, more expensive homes can be bought. For a start, you would quickly find cheap condos for sale in Toronto with which you can first monitor the market before investing more money.
Down payment for real estate is not less than 20%. That is unlike a home you only want as a residence because mortgage insurance does not cover investment properties. So even while you are starting small, you still need to have a considerable amount of money as down payment already. Investment of any kind cost quite some money at the beginning.
Preparation beforehand includes calculating your expenses ahead. After buying the home, inspect it and take note of how much would go into its renovations. There are fixed expenses and variable expenses. Annual property taxes, routine maintenance, and renovation, etc., are fixed expenses and are usually budgeted. On the other hand, variable expenses involve repairs that were not planned. You always need to have a backup plan to handle contingencies.
The importance of having a budget cannot be overemphasized. Budgeting does not just involve planning how much you want to spend or not. It also involves speculations on how much you would make and the expected profit. While budgeting, set a realistic debt-to-income (DTI) ratio. DTI ratio is the percentage gotten when you divide your fixed monthly expenses by gross monthly income. As much as possible, make your budget realistic and plan for emergencies too.
In case you are wondering where to start, look no further. There are several condos for sale in Toronto that are very affordable for most middle-class people. Besides, Toronto is a hot-cake in the market and you are assured of returns for your money spent. However, proper preparation and handling is essential. Good luck!