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A REAL ESTATE INVESTMENT PROJECT, FROM START TO FINISH

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 * A Real Estate Investment Project, From Start to Finish

Let’s face it – plenty of investors make it look easy. But the reality is that
real estate investing is hardly ever fully passive. It requires time, money,
strategic planning and the right partnerships.

Every real estate investment project comes with its own considerations and
complexities, whether you’re looking at a turnkey or a BRRRR. This requires a
strategy tailored to your unique circumstances, your goals, and the specifics of
the property.

However, you’ll find that most REI projects follow a similar process. These
steps are crucial for a successful outcome.

Here’s what typically happens in a property investment project, from start to
finish.


MARKET ANALYSIS AND LOCATIONS

Market analysis is one of the first and most important steps in buying
investment properties. Doing your research and getting familiar with the area
will help you make an informed decision on whether or not the property will be
profitable. Some points you want to know are:


LOCATION

The location of your investment plays a large part in strategic planning and can
make all the difference in the success of your investment. While buying a
property in a booming town can be attractive, it’s important to take a step back
and not let the hype blind you. To make an informed decision, it’s helpful
to ask yourself the following questions:

 * Is there good infrastructure like water, hydro, and access roads?
 * Is the property close to local workplaces?
 * Are there educational institutions nearby?
 * What about local amenities like grocery stores, hospitals, hotels,
   recreational parks and big-box stores?
 * Is there transit near by?
 * Are there any new developments in the area?
 * Is it a Tier 1, Tier 2 or Tier 3 market?


DEMOGRAPHICS

You will ultimately be working with people, so figuring out how your property
will incorporate into tenants’ lives is crucial. Ask yourself:

 * What do the neighbourhood demographics look like?
 * What’s the age of the population?
 * Is it a student area? If a property is located in close proximity to major
   universities or colleges, you will most likely attract students.
 * Is it a retirement town or area where your target clientele is retirees? If
   so, what are their needs?
 * Is there a newly established industry attracting newcomers coming for work?
   Are they moving their
   family or coming to work for 2 weeks in and out?


ECONOMICS

Investors look for things like:

 * Population growth. How much has it grown during recent years?
 * How is the GDP for that city?
 * What is the household median and average for that city? How does it compare
   to the provincial and
   federal average?
 * Do new immigrants locate there, or is it transitory?
 * Are people moving in from different areas of the country (in-migration)?
 * How is the supply and demand for rentals?
 * What are the average vacancy rates in this area?
 * Are there new jobs being created? What is the unemployment rate?
 * What are the main industries? Is this a one employer town?
 * What is the rent price average in the area compared to the city or provincial
   average?

Doing your research will help you decide if a property is worth putting your
time and money into.


DETERMINE YOUR STRATEGY

To figure out the best strategy for you, you first need to ask yourself: What
kinds of real estate assets do you want to own? Is it a few small residences,
like townhomes and condos, or a large portfolio of multi-family properties? Then
create a tailored real estate investment strategy. Don’t be afraid to consult
with an expert to help you get started.


BUILD THE TEAM

Nobody knows everything. That’s why working with professionals is key. Behind
every successful real estate investor are nurtured relationships, strong
partnerships and a team of experts. A solid real estate team should be made up
of:

 * Real estate lawyers
 * Real estate agents
 * Mortgage brokers
 * Quality contractors
 * Property managers

Having the right team is essential to avoiding costly mistakes. Embrace getting
outside help!


BUYING THE PROPERTY (THE PROCESS)

While every deal will look different depending on the property you choose, there
are some standard things to expect.


FINDING PROPERTIES

Realtors can support you in finding the right properties to invest in. A good
relationship with a good realtor can take you a long way. You can also find
properties on MLS, from wholesalers, through your network, and good old word of
mouth. Be sure to connect with other real estate investors – you never know what
kind of deal it might lead to!


PURCHASING

Once you’ve found the right property, it’s time to buy. Here’s what that process
will typically entail:

Analyze the deal: Ensure the deal is viable and makes sense from a business
perspective. Look at factors such as potential rental income, expenses, and
taxes. Make sure to account for potential repairs or renovations as well as
property management.

Negotiate with the seller based on disclosed information.

Make a conditional offer: Once you find the right property, make a conditional
offer with the appropriate clauses and conditions included. Get an inspection
and confirmation of rental income (some purchases may require pages of
conditions; it’s very deal specific).

In some cases, you may need or want to renegotiate with the seller if new
information comes to light
that wasn’t originally disclosed.


FINANCING

In the case of commercial purchases, putting financing into place is a longer
process with more fees. It’s important to consider those additional fees when
analyzing your deals. They can easily amount to 1-2% of the property’s purchase
price. If you’re investing in a $5 million deal, you can easily end up paying
$50-100k in fees to get it financed.


TAKING POSSESSION

If you’re buying a turnkey, taking possession is easy – you may need to hire a
property manager, but otherwise, you’re ready to rent.

However, if you’re going the BRRRR route, you’ll need to get started on
renovations. Time to create a renovation strategy, finalize your budget, and
build a team of expert contractors.

For complex projects like adding units or major renovations, expect a longer
process. In these cases, you will have to notify the tenant and advise them of
upcoming repairs. You may even require them to vacate the unit.


COST OVERRUN

It’s crucial to keep an eye on your carrying costs when renovating a property,
especially if the units are vacant during the renovation period. Remember that
you will still have to pay your mortgage or other loans, as well as property
taxes, insurance, and other expenses.

If the renovation takes longer than expected or there are delays in renting out
the units, these costs can quickly add up and eat into your profits. It’s
important to factor these costs into your budget and to have a contingency plan
in case the renovation takes longer than anticipated.


RENTING IT OUT!

Once the renovation is complete and everything is in order, your property is
ready to be rented out. This is where your hard work and strategic planning can
really pay off. You can advertise your property and begin screening potential
tenants to find the right fit.

Once you have found suitable tenants, it’s important to do property screening
and have a solid lease agreement in place to protect your investment. By renting
out your property, you can start generating income and building equity, which
can be reinvested into your next real estate venture.


FINAL WORD

It’s important to keep in mind that every real estate investment project is
unique, and the steps outlined here are only a summary of the process. Each step
requires careful consideration and planning, tailored to your specific
circumstances and goals.

In addition to the steps mentioned above, it’s important to stay up to date with
the latest trends and developments in the real estate market. This includes
changes in interest rates, tax laws, and zoning regulations, among other things.
By staying informed, you can adjust your strategy as needed and make educated
decisions about your investments. By staying up to date and working with a team
of experts, you can increase your chances of success in real estate investing.

Assera is your trusted real estate investment partner. If you’d like to learn
more about how we can support you in your real estate journey, get in touch.

Turnkey vs. BRRRR →

Ottawa real estate investments

Assera Property Group invests in and manages properties in Ottawa and the
surrounding areas.

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