When it comes to real estate investing in Canada, most people prefer to buy their own property in the hope that the value of it will increase in the future. But you might be surprised to know that there are various ways to invest in real estate in Canada that don’t require owning physical property. If you don’t know what those are, don’t take it as a matter of concern as in this article, we are going to tell you everything you need to know.
Real Estate Investing In Canada
If we break down real estate investing in Canada, we see two paths: active and passive. If we talk about the active ways, you have buying a principal residence, house flipping, owning a rental property, and many more. On the other side, if you go in passive ways, you will have mutual funds, REIT (Real Estate Investment Trust), etc.
Buy a Primary or Principal Residence
The best way to get a tag of real estate investor is to purchase a primary or principal residence. Yes, you have heard it right; when you are investing money in a primary residence, it is like you are making a long-term investment. In other words, we can say that instead of paying the mortgage to your landlord, you are investing money into your mortgage. As a result, your equity will grow, and when you go to sell the house, you will have that money to use for another property or for personal uses.
REIT, which stands for Real Estate Investment Trust, is one of the passive ways to invest money in real estate in Canada. REIT consists of a huge range of commercial properties such as shopping centers, apartments, hospitals, and offices. You can easily buy publicly-traded REITs, which are generally listed on the stock exchange through a broker. Other passive ways that you can go with are mutual funds or Exchange Traded Funds (ETFs). You can buy mutual funds or ETFs from companies that operate businesses and properties, and you gain a portion of returns on those investments.
House flipping is another great way to invest your money in real estate in Canada. For this method, you need to buy a property, renovate it, and after that, sell it for more than it cost to purchase and renovate. However, it is not as easy as it sounds. When you set about renovating a place, you are likely to find issues you were expecting. More than that, you have to find a buyer that is happy with your renovations and are willing to pay what you are asking; many people end up underwater when they rush into house flipping without understanding the pitfalls.
So, this is how real estate investing in Canada works.