Growing up.

I’m not sure when it happens. At some point in our lives, we all realize we’re adults. (sometimes I think I’m starting to become my mother, but that’s another story)

Yep. Grown ups. Maybe it’s when my teen son gives me a reality check about not cranking Ri-Ri too loud when his friends are around or seat dancing in the car. Know what I’m sayin’?

Then there’s that other feeling when visiting a friend’s home and noticing it’s not university living anymore. You know, when furniture doesn’t need an allen key to assemble and there’s “real” art on the walls.  The thought of “hey, it’s time to invest some moula” creeps in mind instead of blowing every hard earned penny on the latest “it bag” or trips to Vegas that no doubt will leave an impression on you…and your wallet.

Believe it or not, there comes a time when we grow up and seriously start thinking about the future… and maybe you’re already in that mind-set. But questions come up sometimes…Do we have the means invest? Can we afford to put away some funds for the future? Can we still invest and enjoy life? Can we manage our day-to-day needs at the same time?

And what are our options?

I have to admit, (and cheesy as it may sound) reality shows have started opening my eyes to more investment options. And recently I had a chance to ask Mitch Parker, a full-time real estate investor and founder of MP Private Capital, for some insight on how to invest in property.

When looking to use real estate for investment purposes, where does one start?

How can a real estate investment firm help you out in this case?

For an investor that wants to take a more hands off approach to their portfolio, an investment or private capital company that deals in real estate can provide a multitude of different options for cash, home equity lines of credit, education, and retirement savings. When looking for a good firm to invest with, you should first start off by asking them to sit down and go over your goals and objectives to see if they align with what you as the investor is looking for. When you find a company that you feel will get you moving in the right direction, do your due diligence. Ask to speak to current investors and make sure all your questions are answered to your satisfaction. This is your hard earned money that will be going to work so you need to feel comfortable.

What are the “hot” areas in Canada to invest in?

Cities in Western Canada will continue to lead the economy throughout the next number of years. A low cost of living versus cities like Vancouver and Toronto, a high average income compared to the rest of the country, strong migration and job opportunities all help to create a great investment landscape. Look especially at Saskatoon and Edmonton as market leaders. In Ontario, cities within an hour commute to Toronto such as Hamilton and Barrie will continue to improve and appreciate at above average rates as people are forced to move further outside the core due to high prices.
What are your thoughts about investing in foreign properties (including US or elsewhere) and how does that affect your taxes etc.

I am a huge advocate of investing in Canada. I think that we have weathered the world recession extremely well due to our conservative financial and economic approach. For these reasons and more, all of my current investments are in Canada. That being said, there are always opportunities to invest in different foreign markets. Before any investor decides to invest in real estate in another country, they should speak to a lawyer and an accountant to determine what legal and tax structures should be put in place. By setting up the correct structure ahead of time, you are setting yourself up for success when it comes time to either expand or sell off the investment.

What are the pros and cons of investing in real estate?

There are many great things about investing in real estate. In fact, I could probably put together a whole article about it. Some of the elements I personally like about it are that the investor can be as hands-on or hands-off as they prefer, that investments can be structured in a way where they are always on title to the property which gives them great security, and that there will always be fantastic opportunities in different segments of the market or different locations. From a full on house flip to investing underperforming RRSP’s in a commercial mortgage, there’s satisfaction in putting your money to work for you.
Some of the downsides of investing in real estate can be that it may be tough to get your capital out quickly should you need it for an unforeseen event. If an investor is planning on either flipping homes or owning rental properties, there can be cons such as the potential to have repairs not anticipated and delays / vacancies which can eat up additional capital. Another con would be to get into a deal that wasn’t fully researched and analysed and end up losing some of the money that was invested.

What should people watch out for when they are investing in real estate?

As with any investment, there are always different types of risk. The key is to manage this risk to make it as safe as possible. Certain variables can be eliminated with proper due diligence and making sure you do your homework. When you’re brand new to the real estate investing world, don’t be afraid to reach out to people that have done what you’re looking to do. Most investors would be happy to look over a deal and help you learn what to look out for and avoid.

Another very important point is to look out for deals that are too good to be true. While 99% of investors operate their business in a legal and ethical way, there are always people that are not looking out for your best interests. Remember, no deal is ever “guaranteed,” so if you hear that word, be very weary. It’s also virtually impossible that you will be able to make 30% every 60 days which I’ve heard more than once. Be realistic with your expectations, run all the numbers, check them over 5 times, and trust your gut instinct.

As with any new investment or subject, there’s going to be a learning curve. The work that you put in ahead of time to educate yourself and make connections will help you tenfold when it comes to actually putting your capital on the line. Remember that it’s okay to be nervous since this may be your first deal. As long as you’ve done the research and analysis from every angle, go in confident with a positive attitude. The best way to really learn something is by getting in there and doing it. I hope that when you start to see some positive results, you’ll enjoy real estate as much as I do.

Thank you to Mitch for offering advice in investment opportunities!

For more information you can also visit www.mpprivatecapital.com

This post is not sponsored, nor was I compensated. I was curious to learn more about investment opportunities. Opinions and financial advice are of Mitch Parker and MP Private Capital. As always, please consult with your financial advisor to discuss what’s best suited for your personal investment needs.