Boosting cash flow gets more and more important as we age, and especially as we near retirement. After all, having extra income can mean being able to enjoy retirement with more security, but it can also mean less stress about finances. The solution that many people are looking at for this financial woe is purchasing a rental property in Calgary. While there are a lot of high real estate prices out there that scare people looking for an investment; there are ways you can purchase properties that will generate a steady income without a lot of risk. The key is to know what type of approach to take with the buying process, and that's where experts come in.
According to Moneysense Magazine, Don Campbell, who is a real estate author and business owner, says that he generally looks for multi-unit buildings that are on the smaller side. He adds that the best locations for him are Canadian cities that are smaller, but growing. In addition to this, he looks for communities that are in close proximity to big cities that have booming economies. Campbell isn't shy to working to make his properties look nice, and said that most homes will need to be spruced up with curb appeal before they can be rented out. After all, if you want to make money off of renting a property, it needs to be rent-able! Curb appeal is the most important priority at first, followed by the inside appearance of individual rooms.
An example of a strategy that Campbell believes can pay off is for a 40 to 50 year old. It starts with finding a six-plex in a good location, and then paying 25% down. After the purchase is made, you should work as hard as possible to pay the home off within 12 years or less. Then, by the time retirement comes, the home will be mortgage-free and a great source of income. 10 year mortgages make the most sense for people who are in their 40s or 50s, since this can result in lower rates around 4%.
Real estate investor Glenn Kohaly said that his approach is to produce steady cash flow, which is why he owns a senior complex in Calgary and two apartment units. He also believes that good asset allocation is extremely important as is avoiding debt. He makes sure his rental income exceed his costs and he avoids risky investments all together. Sensible money management is key with his approach, as he doesn't want to take on a lot of risk that he won't be able to pay back.
Another real estate expert, Rui Torrao, says that single-family homes give him the best cash flow. He works at his real estate investments full time because he is retired, so he makes riskier investments than most other people should. He believes that other investors should approach their investments in a more balanced way.
Finding Your Approach
If you are just starting out in real estate at an older age, it's important to make smart decisions. The experts say to first make sure your rent charges cover your mortgage as well as operating costs. In addition to this, they say to plan for getting all your mortgage debt paid off by the time you assume retirement. Conservative strategies are generally the best, especially if they are met with a lot of time spent considering all options.
I am a licensed member of the Real Estate Council of Alberta since 2005 - proudly representing CIR REALTY, Calgary’s largest real estate brokerage. I enjoy keeping my readers up to date with real estate related information that they can easily understand and use for their own benefit. I welcome feedbacks and comments equally from first-time visitors to my blog, past clients and also from my fellow REALTOR® colleagues. Thanks for stopping by!