One question we often hear is: ‘What happens if the residential real estate market dips after I’ve invested with your company?’ This is a great question because it gives us a chance to address how market movement can impact your investment. This is also a completely valid concern as it is important to feel that your investment is as safe as possible while still offering a positive return.
Here are five key factors to keep in mind when considering investing in residential rental real estate:
#1. Yes, markets will always move, shift, and recover
Even when the markets are impacted dramatically – like in March 2020 – they traditionally recover and return to an upward trend. And if you are invested in rental property, there is still cash flow from tenants during the recovery period. Additionally, the mortgage is still being paid down, which will lead to a higher payout when the markets stabilize and it’s time to sell.
#2. Long-term buy and hold is smart investing
Real estate is an asset that works better as a long-term investment. Historically, housing values increase over several years. All investments carry some risk and uncertainly but investing long-term in rental real estate provides more stability and growth potential than many other types of real estate investment.
#3. Less risk, more gains
Time is crucial to minimizing risk and maximizing gains. Long-term real estate investment is inherently less risky than those that aim to complete the buy/sell cycle quickly (like flipping houses or other short-term speculative ventures) There’s simply not enough time to build proper appreciation, ride out any market downturns, and develop strong positive cash flow.
As well, our region of focus is healthy and growing – there is a real demand for quality rental properties in Durham and projections show this is likely going to stay strong for the future.
#4. Find the right partner
You need to know you can trust any partner you engage with when investing. Research your options carefully. Ensure the company you will be working with has the knowledge, resources, and experience to grow your investment. Review their track record, ask for references, and ensure they can address all of your questions and concerns.
Your ideal partner firm should be focused on:
- Extended appreciation of the investment
- Paying down the principal balance
- Setting up regular recurring monthly cash flow
#5. Get visibility into your investment’s growth
Track your investment’s progress with regular reporting that includes a view into market trends and seeking out information from trusted experts. We recommend quarterly reporting to our partners. This is an ideal time period to show progress in your investment
So yes, there is a chance the market may dip after you make an investment. However, knowing how market trends work and understanding the growing nature of real estate should help you feel confident about investing in long-term rental real estate. Knowledge, patience, and strategy are key to investment success.
And if you are ready to talk about Ontario residential real investments, please reach out to us at info@artolinvestments.com
