Will Multi Family Properties Be A Better Investment in Kitchener 2017?
The reality is that first time buyers are the problem in Kitchener-Waterloo and many cities across Canada.
Almost anyone with a decent job and credit rating can buy their first home in this market … for now anyway.
The Bank of Canada‘s move in October to try and slow down the market by making it harder for first time buyers to purchase a home should slow the market down. However, it typically takes at least 4-6 months for government actions to be felt in the real estate market. Right now, people who were already looking for a new home before the new financing stress test came into play are still “gung-ho” on making that dream a reality – whatever it takes is what many are thinking.
It won’t be until the next wave of buyers realize the hoops they have to jump through only to be approved for a much lower purchase price where they will likely think to themselves, “I think I’ll just keep renting for a little longer ….” thus slowing down the market. And it will happen – by how much? We don’t know. But there will be a ‘cooling’ one way or another.
And while I don’t think prices in Kitchener-Waterloo and Cambridge will necessarily dip, I do believe the bidding wars will lose their appeal (sorry realtors – not really, you’re holding offers tactis are annoying!).
Right now, buying single family INVESTMENT properties in KW can be tough when having to go one on one against first time buyers. Not impossible, but tough!
If you want a single family rental property in KW, you have to act QUICKLY and provide conditions (or a lack thereof) that most first time buyer could never compete with you on.
A FIRM CASH offer!
With these new mortgage rules, first time buyers are reluctant to risk their life by giving such an offer. So use your sophistication against them!
Remember, investor’s putting 20% down play in a different mortgage sandbox than the first time buyers are playing in. You don’t have to be put through the same stress test as they do.
The conclusion on single family right now in KW, is that you have to act VERY quickly and you ALMOST always have to be paying market value in order to scoop up a property. Which is fine!
I always talk about how I GLADLY pay full market value for most of my rental properties. If that’s what I have to do in order to snatch up a great quality rental property in a great area that’s going to be extremely boring and make me money, that’s cool! I’m in this business for the long term, so I’ll win EVERY single time.
But let’s say you don’t want to deal with potential bidding wars or having to act super quick with firm offers, maybe you should switch your attention to multi family properties? Here’s 3 reasons why!
1 – WAY Less Competition
The benefit to maybe switching your focus to multi family properties in KW is because first time buyers aren’t typically buying these types of properties. So it’s unlikely that you’ll have competing offers. Especially once we get into four-plexes and above.
The only other buyers looking at multi family properties are other investors. And what do we know about most investors? They’re just average …
They’re not sophisticated like you are (especially if you follow my blogs, watch my YouTube channel and if you work with me as a client – yes I plugged myself, so what!?).
Investing in multi family properties in 2017 will give you time to actually think before putting in an offer. You can also actually put in conditions like financing and inspection – imagine that!
2 – More Cash Flow in Multi Family Properties
Multi family properties tend to cash flow more anyways, that’s a bonus we already knew.
So I’m sure I don’t have to twist your arm too hard to switch your focus for a little bit until the single family market inevitably slows down. Remember, diversifying your portfolio with BOTH single family and multi family properties is a great idea.
Multi family properties are great in all parts of the real estate cycle (but especially good in down markets) and single family properties do EXTREMELY well in boom markets. But that’s for another blog post 😉
3 – You Can Still Get DEALS (who knew?)
When you’re not competing against another buyer, the seller is more likely to take your offer seriously and actually consider it!
Your specialized realtor (that’s me!) will actually have time to do their due-diligence with comparable properties that have sold. Once you provide the seller with FACTS and DATA, they have no choice but to listen to you – if they actually want to sell the building that is.
This will leave much more room for you to actually get a deal UNDER market value. Something that is almost impossible for a single family property right now in KW. Again, that doesn’t mean that you can’t find a GREAT income producing single family rental that’s going to get you much closer to financial freedom, it’s that you’re not going to get a ‘screaming good deal’ on these properties for a little while.
This isn’t the worst thing in the world – and I don’t want you to think that investing in Kitchener-Waterloo right now is a bad idea. It’s just that your strategy may need to change. But it doesn’t HAVE to.
If you only want a single family property or if that’s all you can qualify for, that’s okay. I’m still finding sweet deals every day of the week! You just have to be prepared to act extremely quickly when I send you one.
If you don’t want to deal with that hassle, than it’s time to switch your strategy. Remember, to key to being a successful entrepreneur in any area of business is to be FLEXIBLE! You can’t be too rigid.
The market changes all of the time and those who change with it and see an opportunity where no one else does will succeed. I’m giving you a heads up 😉
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