Have you ever considered investing in Real Estate? Need help analyzing deals to calculate your return on investment (ROI)? We specialize in this kind of stuff!
Let’s take a look at 3 different investment strategies that we often analyze for ourselves and our clients, which could potentially make you big money:
Type 1 – Flip
Flipping is a type of investing strategy where you purchase a property, add value to the place, and then sell it to make a profit.
For example, let’s take fla look at a flipping scenario: a buyer purchases a $250,000 property, puts $35,000 into home renovations, and then sells it for $350,000 in just short of 2 months. In this example, the investor would have made roughly $50,000 after paying real estate and lawyer fees and paying any holding expenses.
This is a strategy that makes an investor quick cash in a short period.
Type 2 – Turn-Key
A turnkey property is an investment strategy where an investor can purchase a property and immediately rent it out, hence the name “turn-key”.
Let’s take a look at a type 2 scenario: an investor buys a property for $350,000 and puts down 20% to bypass CMHC fees (the minimum % down for a property is 5%). A monthly mortgage payment along with all of the home exfipenses (*utilities, fire insurance, and taxes) is approximately $1,600. The investor rents the property out for $1,800. They would only be netting $200/month however in the long run, they are building equity! Enough equity so that in 5-10 years, a parent would have more than enough cash to put a child through an entire University degree just by selling the property.
Type 3 – BRRRR
BRRRR stands for Buy, fiRehab, Rent, Refinance, and Repeat. “This is an investment method that enables a buyer to borrow against the value of the property when it’s at it’s highest. This method, if done correctly, could help one recover most if not all the money invested in the property.”
This strategy involves a little more planning and details. A great explanation and example of the BRRRR method can be found on the BiggerPockets website in the following article: “How to Invest in Real Estate Using the BRRRR Method” by David Green.
Type 2 and 3 are strategies that build equity over a long period of time.
Taylor, being fresh in real estate, recommends the flipping strategy to build quick equity over a short period of time. She is currently saving her return on investments and coaching her clients (whom are following suit) to do the same. After saving substantial equity, her strategy is to enable herself to be able to invest in bigger BRRRR and Turnkey projects.
BRRRR is a method Leo likes to recommend to his clients. Having been in the industry for over 33 years, he enjoys helping his clients build their real estate portfolio. He personally has executed and holds several BRRRR and turnkey single-family and multi-family dwellings. There is no right or wrong strategy. It all depends on analyzing deals to ensure a strong return on investment. THAT is what we can help with! fiWe thrive on finding good deals and making our clients money.
If one were to hold 5 properties and pay them off by the time they were ready to retire, they could be netting around $5,000 / month just by continuing to rent the properties out. Keep in mind, there would be no mortgages on the investment properties therefore, the investor could sell a property and have the value of the home in cash, minus the real estate and lawyer fees. This in turn, provides the investor with a huge lump sum of cash to have available
Any questions? Feel free to get in touch with us and we’d be happy to explain it all!
Taylor and Léo