Taking A Research-Based Approach to Investing…Some Helpful Tools
As an asset class, one of the key factors differentiating real estate from other investment categories is the fact that real estate is essentially geographically localized. Unlike the financial markets, investment properties in various locales cannot be transacted on an organized national exchange. With this being the case, each community across the country is basically its own sub-market, with a unique risk/return relationship. Without an organized national market and with Realtors and industry professionals typically experts in their own markets only, there is no question that some markets present a far better risk/return proposition than others. However, one of the challenges with local and provincial economic conditions ever changing, is that these cyclical shifts really impact real estate markets, and from year to year, various markets will present better opportunities for investment than others.
While you can typically count on a qualified Realtor (who focuses their practice on working with investors), to assist with locating the best investment opportunities within a given market, you may be wondering just how do you determine the best markets to invest in if you are open to investing outside of your local market? For more on this, check out our post titled Should You Focus Your Real Estate Investments on Your Local Market?
Back in October’s Edition of Investor Insights titled 7 Key Considerations When Evaluating Markets For Investment…, I outlined a number of factors that you should look at when conducting your macro research to narrow your search down to the top markets for consideration. What’s interesting to note is that there are actually a number of credible, free, publically accessible information sources found online. If you are a serious investor, CMHC’s Housing Market Information Portal should definitely be bookmarked on your browser. The interactive portal allows you to easily access pertinent market information such as vacancy rates, average rents, housing starts, housing stock, population, etc. You can also compare various markets that you have interest in, to see how they stack up against each other.
For those looking for a less interactive experience, CMHC publishes a number of informative publications, such as Canadian Housing Statistics, Mortgage and Consumer Credit Trends, Housing Start Data, Rental Market Statistics, as well as Housing Market Insights. You can access reports highlighting national activity, provincially focused reports, or even reports with valuable information on a number of local markets. If you find something you like or that is beneficial in your research process, you can e-subscribe, so that you automatically receive these reports in your inbox when published.
Historically, I have found the rental market reports a great source of info. Up until 2015 they actually published a comprehensive nationwide report, however, more recently they have moved towards detailed provincial reports such as BC’s 2017 Rental Market Report as well as the abbreviated Canada Highlights version. These reports provide information on vacancy rates, turnover rates, average rental rates, number of rental condos in the market, ownership vs. rental ratios, etc. These tables allow for top performers to very quickly be identified and cross-referenced with average multi-family unit costs in these top markets from publically available MLS and real estate board data.
With the most recent census happening just last year, this is still a relatively valuable source of information on a market, provide tremendous insight into the local population with information on incomes, household composition, average age, education levels, labour force categorization, etc.
I could continue on with a list of countless other credible resources that you can draw into your research process, however the most important takeaway from this post is that by leveraging these free resources and doing your homework, you can potentially discover opportunities that would be less risky, with more upside return potential, and the only cost is your time. It seems in life that most people either have lots of time and not enough money or lots of money and not enough time to pursue the life they are looking for. It’s no different with investing…My recommendation if you are interested in investing but don’t currently have the money to do so is to educate yourself, really make yourself an expert…Finding the money to invest will likely become less challenging if you are able to seek out solid opportunities, as you have to remember, there are always those on the other side of the fence with not enough time, but that do have the investment capital to deploy if the right opportunity comes up.
If you are considering an investment in real estate, put our full-service advisory team to work for you. Contact us anytime for your complimentary consultation at 250-751-0804 or firstname.lastname@example.org.