5 Common Myths About Real Estate Investment

With demand for rental housing in the Greater Toronto Area reaching record heights, buying a rental property makes more sense than ever. Plus, in addition to bringing in some serious passive income, investment properties often have great resale value long term.

If you’re new to real estate investment there are a few common misconceptions to be aware of. In this post we’ll debunk 5 common myths about owning a rental property. 

Looking for an experienced agent who can help you buy a great investment property? We can help. Explore our approach to buying here.

1. Buyers and Renters Follow the Same Market Trends

In most cases, buyers and renters respond differently to market conditions. For instance, in a seller’s market, buyer demand is high. But that always doesn’t mean the demand for rental properties will be equally inflated. In the case of Toronto’s red-hot pandemic market, buyer demands were influenced by the availability of highly-affordable mortgages. As a larger number of Torontonians could afford to buy, there was less overall incentive to rent. 

In today’s market, rising interest rates are slowly pricing some buyers out of the market. Without the ability to afford a home, a growing number of residents remain reliant on rental housing. So while buyer demand is cooling off, competition amongst renters is reaching new heights. 

For investors, the good news is that the demand for rental housing in Toronto isn’t going to decline anytime soon. As a growing city, the Greater Toronto Area is constantly welcoming new residents, many of whom will need rental housing. 

2. Finding Tenants is a Hassle

While owning a rental property is a great way to earn passive income, you’ll want to ensure you find the best possible tenants for your unit(s). After you begin showing your property to prospective renters, items like references, proof of income and interview questions should all be key elements of your tenant screening process. These steps are important for ensuring that you find a responsible and financially secure tenant who will help you get the best return on your investment. 

Finding great tenants may seem like an overwhelming task, but it doesn’t need to be. In fact, your real estate agent can help you with the process. Beginning with listing and showing your rental property to handling applications and screening, they can make the tenant acquisition process easy and stress-free.  

Looking for more first-time investor resources? Check out these blog posts.

• Should You Invest in a House or Condo?
• The Ultimate Property Maintenance Checklist
• How to Buy an Investment Property?

3. Real Estate Investment is Only Profitable in Certain Areas

Another common misconception about real estate investment is that the only place to buy a profitable rental property is in dense city centres. In reality, the demand for rental housing is high almost everywhere across the GTA – not just in its urban cores. A detached home or basement suite in Vaughan can be just as lucrative as a Bay Street condo. 

While some areas may have greater renter interest than others, real estate is a strong long-term investment in most GTA neighbourhoods. Buying property in existing high-demand areas and up-and-coming neighbourhoods both have their advantages, and you can work with your real estate agent to determine the best path for you. 

4. Being a Landlord is a Big Time Commitment

Time spent on landlord duties will vary based on how many tenants you have, lifestyle factors and the property itself. However, it’s rarely a full-time commitment. If you’re concerned about landlord duties, chat with your real estate agent. They can help you find a property that is less likely to need consistent repairs or upgrades. Or, If it fits your budget, you can hire a dedicated property manager to take care of your rental property for you. They can take on a variety of responsibilities from repairs and maintenance to tenant affairs. 

Entering the condo market as an investor? Explore these helpful articles from our blog. 

• An Investor’s Guide to Pre-Construction Condos
• Working With an Agent When Buying a New Development Condo
• 5 Tips For Getting a Mortgage

5. You Should Only Invest in “Fixer Uppers”

As the subject of many TV shows, house flipping has been turning heads among real estate investors in recent years. While run-down properties may come with appealing price tags, they’re not exactly the easy money scheme many investors expect. In reality, flipping properties successfully requires a lot of capital, time and expertise. For many investors, especially those just getting started, buying a traditional turn-key property is the right way to go. 

Ready to begin your real estate investment journey? Get in touch with us today to get started.