Recent housing trends have altered what’s possible when it comes to real estate investments. Market rates have changed dramatically over the last two years, making it feel like investing in real estate is impossible for the average person.
For reference, five years ago, $100,000 would be more than enough for a downpayment on a single-family, detached home in Ottawa. Now, not so much.
So, what can you do with 100K in 2022?
Look into smaller markets.
You don’t need to own a property in a large city like Toronto or Ottawa to see significant returns. You just need to balance the cost of your property with its potential rental income amount.
Look at what units in your area of choice are currently renting for, what the potential for higher rent in the future looks like, and the costs of having it managed for you by a local expert.
When you look for properties outside of the area you live in, you can find properties that are within your budget even when you factor in the cost of hiring an on-site manager.
Some areas where 100K still goes a long way include:
Invest in REITs
We did a whole blog on REITs earlier this month. Check it out here.
Like we said in our previous post, REITs can be a great option not only for those with limited investment funds but also for those who don’t want to become a landlord.
Get into the Private Pool
“Private Pools” allow investors to pool their funds as a part of a limited partnership that owns property directly.
In this scenario, you and your partners have equal ownership (or ownership scaled to your investment amount) of the property or properties but will outsource the management of said investments.
You can enter private pools with trusted investment companies, but they typically require a 6-month notice from investors when they wish to pull out their equity. Beware that private pools can come at a steep cost, and your $100,000 may not be enough.
Become a Private Lender
You can lend your $100,000 to someone else’s project and collect interest on your loan.
This is not something you can tackle yourself. You will need the assistance and advice of a real estate lawyer, and it would be highly beneficial to consult a mortgage broker who specializes in private lending.
By charging double-digit, short-term loan rates, you can quickly grow your $100,000 and generate enough income to invest through any of the above avenues.
Invest in the Ottawa Condo Market
This option may be the most simple of all.
Investing in the Ottawa condo market is a great way to utilize your $100,000. The average price for a condominium in Ottawa for December 2021 was $398,665. While the condo market has seen growth, it hasn’t been as fast-paced as the freehold market, which makes it a viable option for those looking to invest in real estate.
Your $100,000 will easily cover a 20 percent downpayment required to purchase a condo at the above price.
Just like when you’re looking in markets outside of Ottawa, look at what units in different areas are currently renting for and what the potential for higher rent in the future looks like. This process is much easier because you live in the city you’re investing in and likely have a general sense of the market already.
Entering the real estate market in 2022 isn’t impossible – it just may take a few extra steps before getting where you want to be.
Before making any sort of investment, ensure you do your research and due diligence. Being informed and knowledgeable is the best place to start when entering the real estate market.