7 mistakes to avoid as a a real estate investor

So you're thinking of investing in a property in Toronto or the GTA…you're not alone: investors now make up more than 25% of Ontario homeowners – and more than one-third of condos in Toronto are owned by investors.

If you've never invested in real estate before, it can seem pretty daunting. There's a lot to keep in mind, from finding a place that’ll give you a good return on investment, to renting it out, to being able to swing a 20% down payment. Julian Kashani, Broker with Property.ca, works with a lot of investors, so we asked him about the most common mistakes investors make and how to avoid them.

Mistake #1: Overlooking “stale” listings

Buyers often assume a listing that’s been around for 30, 60 or even 90 days has something wrong with it. But it may be that it wasn’t staged, the listing photos are terrible, it needs work, or the tenants left it in a mess and the owner doesn't live locally. It could be anything.

“These places can be diamonds in the rough,” says Julian. “They may not be staged or in the best condition, but that can actually make them a great value because fewer people are looking at them. Often the savings you can get are far greater than what you’d spend fixing it up.” 

Mistake #2: Not thinking about rent control 

Did you know that any residential unit that was unoccupied before November 2018 doesn't fall under Ontario rent controls? According to the Ontario Government, “new buildings, additions to existing buildings and most new basement apartments that are occupied for the first time for residential purposes after November 15, 2018 are exempt from rent control.” Which means there’s no limit on how much you can raise rent year-to-year. 

It’s a balancing act: do you pay more to buy something newer that will attract more renters and fetch a higher price? Or something a bit older that may cost you less upfront…but offer less flexibility in the long term?

Mistake #3: Assuming you have to have 20% to put down

If you’re buying a resale unit and you’re not a first-time homebuyer, you do have to put 20% down. But remember, resale isn’t your only option. Buying a pre-construction unit can help if you don’t have a big chunk of money available right now. You’ll likely have 2,3 or even 4 years to pay it in installments. And there are lots of opportunities out there in pre-con right now, with assignment sales on the rise. 

Mistake #4: Expecting to make a lot of money fast

Real estate investing is a long game: the market can change in an instant, and you aren't guaranteed to see a profit ina short amount of time. Smart investors look at real estate values over time, because in the long term (5 or 10 years) they have consistently gone up.If you go into an investment knowing you'll be holding on to it for a few years, that's your best bet for solid ROI. 

Mistake #5: Sticking to traditional buying tactics

Scouring listings isn't the only way to find a great real estate investment unit: a good agent will know how to get creative.

“When my clients are looking for something specific, I don't just look at what's for sale on MLS,” says Julian. “I approach owners of rental units who might want to sell and put notes in mailboxes to let owners know I have a motivated buyer interested in the building or the neighborhood.” 

Mistake #6: Not looking at assignment sales

If you’re working with a well-connected agent, they will have access to opportunities that aren’t readily available to the general public – like assignment sales, which can have strict rules about how they can be advertised. Read more: Assignment sales 101

Mistake #7: Not working with an agent who specializes in investment properties

The market can change dramatically from week to week. Work with a full-time agent who has their finger on the pulse, is an area and property type expert, and has the experience to guide on what a good investment looks like.