Finding success in real estate investing requires a certain competitive edge—something you can use to set yourself apart from other investors in your area. It’s this competitive edge that’ll help you appeal to prospective renters, tenants or buyers. Ultimately, your edge is whatever you have that other investors don’t.

In Canada’s increasingly fierce property market, however, it’s becoming more challenging for small, personal investors to break through and make their mark in real estate. A recent study from Transparency International Canada (TI Canada) shows that in the Greater Toronto Area (GTA), corporations bought a significant amount of real estate using all-cash transactions. In fact, 35 percent of corporate real estate transactions in the GTA between 2008 and 2018 were all-cash purchases!

Why is this a problem?

The dominant force of corporate entities in Canadian real estate, as well as their ability to conduct all-cash transactions, is making it more challenging for personal and non-institutional investors.

Few have the cash on hand to break-through into the real estate market and begin investing. Corporations are able to conduct real estate transactions more rapidly and leanly, providing sellers with significant benefits. Additionally, corporations amass large volumes of investment assets. This provides a more cohesive experience for tenants and residents.

However, there are ways personal real estate investors can set themselves apart in an increasingly competitive field. You need to find and maintain your competitive edge over corporate and institutional real estate forces.

Reduce your risk

The key to any successful investment strategy is figuring out how to best reduce your risk, while also making investments risky enough to reap a significant return. Learning how to assess and reduce risk will provide you with a significant competitive edge. This, in turn, will help you to hold your own even in the most aggressive real estate markets in Canada.

The more experience you have in real estate, the more familiar you’ll be with risk. If you’re just getting started or need a refresher, here’s how to minimize risk at its most basic level:

Identify predictable markets: One of the largest and most obvious risks associated with real estate investing is the unpredictability of the market. While a market may seem like it’s heating up to record heights, it may actually be on the precipice of a crash. Savvy investors look at long-term trends and identify stable, upward markets in which to invest.

Eliminate negative cash flow: There’s no getting around it—it’s not cheap to enter the real estate industry. From the moment you buy your first investment property, you run the risk of negative cash flow. This occurs when you spend more to operate and maintain your property than you reap in passive income. It’s important to make your operation as lean as possible and sell off problematic properties before they eat into your liquidity.

Avoid potential vacancies: If you can’t find tenants to take up residency in your investment property, you won’t be generating any passive income off of it. Only buy properties in desirable areas with a demonstrated record of high occupancy rates.

Screen for bad tenants: The only thing worse than a lack of tenants is leasing your investment property to bad ones. Bad tenants can drive away other tenants, miss rent payments and fees and cause significant damage to property. Learning how to properly screen for desirable tenants will afford you a significant advantage.

Maintain liquidity: Make sure you have enough liquidity to respond to a crisis, if one ever occurs. Even large, corporate investors struggle to maintain a good balance of invested capital and liquidity. Find the balance that’s right for you and your investing strategy.

Staying competitive

Whether you’re an established investor on your way to financial independence or a first-timer looking for an initial property to purchase, there are many ways you can stay competitive against both personal and commercial investors in your area. Here are some of the most important things to keep in mind when developing a competitive real estate investing strategy:

Know your competition: Do the legwork to understand and possess a thorough understanding of the players (big and small) in your local real estate market. Know their different niches, and the ways in which they structure their real estate deals. Also, try to get a sense of the way they meet (or don’t meet) the needs of their tenants and residents.

Never stop marketing: As with all businesses, marketing is one of the most important things you can do to ensure success. Be sure you have a strong, dependable marketing strategy on a year-round basis. You shouldn’t only market when there’s a vacancy at your property! Your marketing strategy should help you establish a consistent brand voice.

Understand your niche: Every real estate investor should strive to meet the needs of a specific market segment. For instance, if you’re listing a furnished apartment available for short-term rental, know the specific needs of the corporate housing market. If you don’t understand your niche, you won’t be able to adequately understand their needs and provide services that set you apart.

Build relationships: It may seem counterintuitive, but building relationships is actually the most important thing you can do to provide yourself with a competitive edge when investing in real estate. Working with other investors can provide you with new insight into the market and offer you referrals for contractors or even prospective tenants.

While it’s becoming more challenging to leverage the real estate market as a personal investment vehicle, Canada’s real estate scene still possesses the power to be a sound, high-yield investment for people working toward financial freedom.

Solo investors need to learn how to compete with even the largest institutional investment companies. It starts by establishing your niche, minimizing your risk and building relationships with your local community of real estate investors. Together, this represents your competitive edge and will allow you to make the most of your position in the industry.