What you are going to do to save yourself. Today we are going to discuss what will be your real estate investment strategy in case the market crashes. As you know we had a recent increase in prime lending rate by 0.25 basis point as the prime lending rate fluctuates it’s going to impact your interest rate which is going to put a question mark on your cash flow.
As a real estate investor as of today we are in a balanced market this means we don’t have crazy multiple offers or a bidding bar situation on properties but speculation is that interest rates are going to go up in the future which is going to further impact your cash flow.
So in today’s video, we are going to discuss all the strategies how to protect yourself as a Real Estate Investor
1. Don’t get into the madness of buying the property and giving more than the real value of the home we had seen that in the last I would say two years people are going into multiple offers but as of today if you are overbidding the price you will be the first one to be impacted in case the market crashes.
2. Over-leveraging always take calculated risks don’t buy beyond your affordability. This means in case you are planning to buy a luxury flip why not consider the market situation go for a duplex conversion where you are paying less and in case the market is not sustainable you have multiple exit strategies. You are not selling now you’ll sell after six months you can sustain and bear the cost of that property by renting it out.
3. Working with a professional in North America. I have learned one thing always work with a person who’s an expert in their field because based on their experience they can always guide you mentor you and get the right deals for you same applies to real estate. Always work with the investor-focused real estate team so you can save while you’re buying and you can always, mitigate your risk based on their network and connections they will always stand with you and you will sustain the bad times emergency buffer funds yes as a real estate investors always set aside three to six months of your mortgage payment so you can sustain those bad times.
4. Multiple units are two sources of income are always better than a single source same applies to real estate why not buy a duplex in case of buying a single plex like a condominium unit. Nothing bad against those condo apartments we sell them but the point here is if you have multiple sources like an upper unit and a basement suite. It will have a better cash flow for you in bad times because nobody is going to stop renting. Considering the Canadian immigration plan as you know in 2022 itself there will have more than 400 000 people landing as permanent residents in Canada and even if the market crashes nobody is going to stop renting because we always need a home so it’s always recommended to have multiple units.
5. While you are investing in real estate refinancing yes in the last two years you had seen such a fabulous growth in real estate because the prices went up because of low-interest rates or demand-supply issues. We don’t want to talk about that but the point is you can always refinance and take your equity out for your bad times in case you don’t have any job when the market crashes or there’s a bubble that burst out you always have some buffer funds available.
To summarize all these points irrespective of the market conditions if you are doing the right investments and you have someone called tenants to pay for your mortgage you’re always building your wealth.
Being a real estate investor either somebody is paying for your mortgage your principal is going down values are appreciating and you have a tax write-off further you have a cash flow from those investments
Thanks for reading we will have a lot more content coming for investors, first-time home buyers, or real estate agents.