Investing In Real Estate – Building The Right Team #1: Realtor

Last week, we briefly reviewed a list of the team you should consider building if you want to become a real estate investor. Over the next set of posts, we will elaborate on some of these team members and what you should know. To begin, we will start with arguably the most important member of your team... the realtor ☺.

What should you look for when choosing a realtor to help you with investment properties?

Consider a realtor who specializes in income properties, or at least has significant experience with dealing with investor clients both on the buying and selling side. Ask for a list of properties they have worked on and possibly for references. It is also a huge bonus to have a realtor who is an investor themselves. They will be able to speak from first-hand experience and should be able to offer excellent insight. Choosing the right realtor is especially critical when investing outside of your home market, where you’ll be relying on them more for information about that market.

In what ways will my chosen realtor help in the process?

Your realtor should meet with you, understand your goals for investing and gauge your financial and management abilities to invest in properties. They should provide you information about the rental market, including rents, vacancy rates, employment info, demographics, municipal and fire code regulations, neighbourhood info and more. At this point you should be ready to look into specific properties and narrow down your focus to the right property for you. After finding the right property, your realtor will handle offer negotiations, facilitate inspections, appraisals, etc. to meet conditions and generally handle the sale right through to closing.

In what ways can my realtor go over and above?

Your realtor should have ideas and insights to help you be successful. They should understand the rental market and what makes a unit marketable to tenants. They can provide advice regarding value added renovations, marketing of vacancies, how to handle tenant inquires and applications and general maintenance of the property to keep things moving steadily. They can also provide referrals to other professionals for your team, including lawyers, mortgage brokers, insurance brokers, building inspectors, management companies, etc. Lastly, they should protect your interests at all times. They should see red flags such as blatant fire code violations, undesirable tenants, inefficiencies (electric heat loss) and other potential headaches of future problems.

This is a brief discussion about what to look from your realtor when looking at investing in real estate. It should give you some guidelines to get you started. Good luck!

Growing Trends for 2016 Real Estate - The Aging Baby Boomers

One of the largest and most important factors when looking at the broad real estate market is the demographics within that market.

The largest and most noteworthy demographic generation of modern times, is commonly referred to as the “Baby Boomer” generation. The Baby Boomer generation refers to people born during the demographic post–World War II baby boom approximately between the years of 1946 and 1964, giving an age range between 51 and 70 as of 2016. As a group, they were the wealthiest, most active, and most physically fit generation up to that time, and amongst the first to grow up genuinely expecting the world to improve with time.

The sheer size and wealth of this cohort has had a large impact on the real estate market over their lifetimes. They own and control a significant portion of the real estate in our markets today. As they continue to age and hit traditional retirement age, their future plans for this real estate and their future real estate needs will undeniable influence our markets.

A few of the impacts we have seen from this aging baby boomer trend and expect to see in the future include:

1. As their children move out and they become “empty nesters”, they will seek to downsize their personal residences. This should lead to higher resale supply at some point, although the timing of this is uncertain as boomers have been staying in their homes longer than expected. This supply might come as a godsend considering the low supply the current market has seen of late. Also note that not only are they looking to downsize physically, but also importantly to downsize financially, as a large part of their net worth’s are tied up in the equity in their homes.
2. The boomers who have downsized are seeking to not have to deal with stairs as they age, so one floor homes are attractive. This translates into larger demand for ranch/bungalow style homes. Also townhouses or semi-detached homes or condos are popular choices.
3. These boomers are more active and have higher retirement incomes than previous retirees and as such require more amenities or available activities. Trails, parks, golf, tennis, etc are important in these neighborhoods catering to aging boomers.
4. The demand for healthcare will increase as the proportion of the senior population increases and life expectancy continues to increase. This healthcare needs to be high quality and conveniently located and the new medical development we’ve been seeing in various markets has reflected this.
5. As this age cohort continues to age in the future, nursing homes or assisted care facilities demand will greatly increase. Also considering the retirement income of this group, the quality of these facilities will need to reflect the choice that this group will demand.
6. Vacation and winter properties will be in demand from these retiring boomers as they have the means to afford such recreational properties. Lake communities and snowbird locations have already seen the start of this wave of demand.
7. Lower cost communities stand to benefit from migration from higher cost urban communities. As stated before, boomers have a large amount of home equity that needs to be unlocked for retirement incomes and a move that frees up that equity will look attractive. In our home market of Windsor ON, with some of Canada’s lowest housing prices, we’ve seen a huge pickup in demand from retirees from the GTA and other higher cost markets.

The aging of the baby boomers is a huge upcoming development in the real estate market and one that has just started to play itself out. How it does play out will have far reaching ramifications for all of us.

Have you noticed these demographic impacts starting to play out in your market?

---

Russel Lalovich
russel@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 995-5620