To succeed in real estate investing, you will need a competitive advantage—something that will set you apart from other investors in your area. This competitive advantage will help you attract potential renters, tenants, or buyers. In the end, your competitive advantage is anything you have that other investor do not.
Table of Contents - Corporations Might be Your Biggest Competitor for Real Estate Investments in Cities
- What exactly is the issue here?
- Limit your exposure to danger
- Maintaining your competitive edge
- The Biggest Opportunities in Commercial Real Estate Right Now
However, in Canada's increasingly competitive real estate market, it is getting more difficult for small, individual investors to break through and build a name for themselves. According to a recent report by Transparency International Canada (TI Canada), corporations purchased a considerable quantity of real estate in the Greater Toronto Area (GTA) utilizing all-cash transactions. Between 2008 and 2018, 35% of corporate real estate sales in the GTA were all-cash purchases!
What exactly is the issue here?
Personal and non-institutional investors are finding it more difficult to participate in Canadian real estate due to the dominance of corporate entities and their ability to perform all-cash transactions.
Few people have the financial means to enter the real estate market and begin investing. Corporations can undertake real estate transactions more quickly and efficiently, resulting in major benefits for sellers. Corporations also collect enormous amounts of investment assets. Tenants and residents will have a more integrated experience because of this.
There are, however, ways for individual real estate investors to stand out in an increasingly competitive sector. You must gain and keep a competitive advantage over corporate and institutional real estate forces.
Limit your exposure to danger
The key to any successful investment strategy is determining how to minimize risk while yet making investments that are risky enough to yield a high return. You will gain a substantial competitive advantage by learning how to identify and manage risk. As a result, you will be able to hold your own in even the most competitive real estate markets in Canada.
The more real estate experience you have, the more comfortable you will be with risk. Here is how to reduce risk at its most basic level if you are just starting started or need a refresher:
Discover predictable markets
The unpredictability of the market is one of the most significant and visible hazards associated with real estate investing. While a market may appear to be reaching new highs, it could fact be on the verge of collapsing. Long-term trends are used by savvy investors to discover steady, ascending markets in which to invest.
Eliminate negative cash flow
There's no denying it—entering the real estate sector is not inexpensive. You run the danger of negative cash flow from the minute you acquire your first investment property. When you spend more on operating and maintaining your property than you earn in passive revenue, this is what happens. It is critical to keep your business as lean as possible and to dispose of troublesome properties before they deplete your cash flow.
Avoid prospective vacancies
You will not be able to earn any passive income from your investment property if you cannot find tenants to live there. Only invest in properties in high-demand locations with a track record of high occupancy rates.
Look out for bad rentals
The only thing worse than a shortage of renters is having to lease your investment property to poor ones. Bad tenants might evict other tenants, fail to pay rent and fees, and cause major property damage. You will get a huge edge by learning how to properly screen for suitable tenants.
Make sure you have adequate cash on hand to deal with a crisis if one arises. Even huge corporate investors have difficulty maintaining a healthy balance of invested money and liquidity. Find the ideal mix for you and your investment strategy.
Maintaining your competitive edge
There are various methods to stay competitive against both personal and commercial investors in your area, whether you are an experienced investor on your journey to financial independence or a first timer seeking for an initial property to buy. Here are some of the most crucial considerations to make when formulating a winning real estate investment strategy:
Know who your competitors are
Make the effort to learn about and comprehend all the players (large and little) in your local real estate market. Understand their various specialties and how they structure their real estate transactions. Also, see how they address (or do not address) the requirements of their renters and inhabitants.
Never cease marketing
Marketing is one of the most crucial things you can do to assure success in any business. Make sure you have a solid, sustainable marketing strategy in place all year. You should not just market your house when there is a vacancy! Your marketing approach should assist you in developing a unified brand voice.
Recognize your market segment
Every real estate investor should seek to suit the needs of a certain market group. If you are selling a furnished flat for short-term rental, for example, be aware of the needs of the corporate housing market. You will not be able to effectively comprehend their wants and give services that set you different if you do not understand your specialty.
It may sound contradictory, but the most crucial thing you can do to give yourself a competitive advantage when investing in real estate is to build relationships. Working with other investors might provide you new perspectives on the market and assist you with contractor or tenant connections.
While it is becoming more difficult to use real estate as a personal investment vehicle, Canada's real estate market still has the potential to be a smart, high-yield investment for those seeking financial independence.
Even the greatest institutional investing firms must learn how to compete with solo investors. It all starts with defining your specialization, lowering your risk, and cultivating partnerships with other real estate investors in your area. This is your competitive advantage, and it will help you to maximize your position in the industry.