Which of the three types of investment properties will be the best choice for you will depend on your objectives as an investor, as well as your buying criteria and budget. In this post we've broken each property type down into beginner, intermediate and advanced investment opportunities.
- Beginner investors: If you're a first time investor without a large financial backing, then a buying a well selected condo will most likely be the best choice. We say "well selected" because a poor choice of condo can result in low capital growth and depending on the market can end up bringing in a lower than expected return.
- Intermediate investors: If you already have a few properties under your belt, or you have a larger financial backing, buying a few condos or a duplex as an investment can diversify your portfolio; reducing your risk and over time yielding healthier returns. Investing in single family homes can be just as lucrative, offering stable occupancy rates and high appreciation rates. Revenue properties with more than two doors are generally not suggested as first time investments, as they require much more maintenance.
- Advanced investors: Nothing does better for investors than buying a multiplex with 4+ units. With a strong rental market in the greater Montreal area, there is never a lack of people who are looking to rent. Multiplexes can be structured so there is little management intervention required from yourself with the whole property being managed by your own small team of people. This type of investment is by far the most lucrative for those who have a large financial backing. managing a multiplex can be compared to running a small hotel (just without all the nice room service). many investors prefer this as they can combine a large chunk of their portfolio under just a few well chosen locations, rather than having condos and smaller duplexes spotted all over the city which can become a pain to manage as the number of properties gets larger and larger.Similar to a multiplex is a duplex split between commercial and residential units. Because of the higher risk nature, it is reserved for individuals with a large financial backing who can afford the large down payments and higher interest rates associated with commercial loans from financial lenders.
If you are already working with a broker, they will advise you on the best way to structure your investment portfolio to meet your individual goals. Choosing the right property is key to success in the world of real estate. The less effort put into finding the perfect investment, the more risk you will add.
Diversification is always important in any portfolio - even for investors who own large multiplexes, it's always good to have a few other property types in different locations to ensure on-going operations and for re-sale as the market conditions change over time.