Do you want to become a real estate investor but don’t have the capital? The real estate industry in Canada is growing steadily and becoming an investor will provide you with some amazing long-term benefits. However, real estate in Brampton is expensive and you might not have 20% down payment to purchase the investment property.
I’m going to list down 6 ways you can purchase an investment property in Brampton with very little capital:
1. Form a real estate partnership
You need 20% down payment to purchase an investment property in Canada. You can choose to contribute only a part of it or split the down payment equally. You and your real estate partner will become equity homeowners. Work with a real estate lawyer in Brampton to establish terms and conditions of the property.
2. Get a microloan
Microloans have opened up new streams of opportunities for small business and investment ventures. It is different from a traditional loan from a traditional lending institution. Since the borrowed amount is smaller, the eligibility criteria is easy.
3. Trade houses
If you’re already a property owner, you can trade it for a new, bigger property and rent out a couple bedrooms or the basement to generate income. When you trade properties, you don’t have to pay capital gains tax from the sale of the older property. It works best when you have no capital to invest towards the new property in Brampton.
4. Purchase shares of a real estate investment trusts (REITs)
When you purchase a property in Brampton in a real estate partnership and let’s say you have 15% equity, you can’t sell your shares until you find someone to purchase them. That’s not how a real estate investment trust works. Selling and buying shares is as easy as it’s at the stock market. You can also purchase commercial property shares. The REITs manage everything from every property maintenance to repairs and renovations.
5. Get a hard money loan
A hard money loan is a loan from a private lender and the interest rate is typically higher than traditional loans. Since these are unregulated loans, each lender has their own terms and conditions. These are recommended for short-term loans and if you’re good at negotiation, you’ll get a good deal.
6. Negotiate a seller financing deal
If the home seller is an investor, you can likely strike a seller financing deal with them. In a typical scenario, you’ll take a mortgage from the bank but in this one, the seller will allow you to pay them the total amount over a period of time. They do not have strict regulations like minimum down payment, so you can workout a good deal with them. You should know that this type of deal is rare, so work with a real estate lawyer to understand its workings.
No successful real estate investor had tons of money to invest. Most of them hustled their way and started out with very little capital. If you’re looking for real estate advice, I am here to answer any questions you have. Contact Realtor Catherine Nacar today!