If you’re able to project how a rental property is going to perform, and you’re able to understand exactly how much cashflow you’re going to have after your mortgage and expenses, you can build a successful portfolio. While growing my portfolio, I’ve looked at hundreds, if not thousands of deals, and one thing became very clear: investing in real estate is a numbers game, and cash flow is king. Over the past few years I’ve grown my real estate portfolio from a small 4plex that I house hacked, to 22 apartments worth over $1.6 Million dollars. Ben has a rental portfolio of 22 doors, and has used the calculators in this article hundreds of times in As your finances grow, you can invest in properties with terraces and other features that give you a competitive edge when it’s time for resale.About The Author: Ben Mizes is a real estate investor, licensed real estate agent, and CEO of Clever Real Estate.
Using a Realtor throughout the process who can guide you toward investment opportunities that have great margins and profit potential is the best way to kick-start the process. So while it’s much harder to land a positive cash flow rental property or income property in Toronto, if you invest in the market wisely and within your means you’ll begin building equity, growing your portfolio, and amassing wealth. As your portfolio grows, you’ll eventually be able to sell one of the properties allowing you to pay off balances, leaving you with several properties building equity, no remaining debt, and a healthy cash flow positive rental income. The beauty of investing in pre-construction condos is that it requires very little upfront so you’re building more equity with a minimum investment. As your mortgage goes down and rent prices go up, your rental income will continue to increase.Īs your investment builds equity, you’re able to borrow that equity (up to 80% of the property’s market value) allowing you to leverage that money into additional properties. While you may not succeed in finding a cash flow positive or income property in Toronto, you are building equity - and fast. Historically in Toronto, real estate averages a 5% increase year-over-year, though the market has been out-pacing this average in recent years. We know by precedent that by holding a property it will increase in value. Related: The Best Day to Buy Real Estate is Yesterday To ensure that you are comfortable, choose an investment that fits your financial situation and risk tolerance. The sooner you’re able to get your money to start working for you by getting into the market, the better. The bottom line is anyone looking at real estate as a means for creating wealth that hasn’t yet gotten into the market is missing out. Meanwhile, someone else is paying down the principal on your mortgage and that negative cash flow can also be written off against your capital gains.īy reframing the way you look at your investment, it costs you $3,600 to make $30,000. Seems crazy right?īut what if I told you at the end of that year you’ll have actually earned 5% in equity on your property? So while on paper you may have lost $3,600, in the grand scheme of things your property’s value went up and earned you $30,000. When you put all of your expenses into your investment property calculator - monthly mortgage, property taxes and insurance, condo fees, etc - and deduct that from your rental income, let’s say you actually lose $300 a month to carry that rental property. Let’s say you own a rental property that cost you $600,000. Sure, the rental cash flow is a nice bonus, but in a market like Toronto, you make the most by investing wisely and building equity. When approaching the economics of finding a good rental property, you always want to have a long-term vision.
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