As a resident of Ontario, it’s hard not to notice the buzz surrounding the G.T.A (Greater Toronto Area) housing market as real estate prices and rental rates have increased dramatically over the last decade.
Naturally, the reaction from many has been to find ways to participate in this booming market. Most often, individuals believe that the best way to earn money from real estate is by purchasing a residential property to rent out. You’ve probably heard many people doing it, from your neighbours to your Instagram feed.
So why shouldn’t you participate in all the passive-income, it seems simple doesn’t it?
What No One Tells You
To many the idea of earning a passive-income stream through real estate is easy. In reality, real estate can be a very feast or famine opportunity even if you’re purchasing more than one unit of real estate. The reason for this is because owning real estate can be an emotional roller coaster. Even though your asset price isn’t tied to exchange fluctuations like a stock, the physical asset itself can deteriorate or be deliberately destroyed by tenants.
As a landlord you quickly learn that there is a certain limit as to how much you can manage personally. You are typically responsible for a lot, especially if your asset is more than a couple of years old. When the heat goes out or if there’s a flood, you’re the first point of contact. Even at 4 am, you’re responsible for calling the plumber and waiting till the issue is resolved.
What many don’t realize is that issues with real estate don’t just drain your bank account, its also a lot of time and effort out of your day/night.
A Better Way To Invest In Real Estate
A great alternative that many don’t consider is investing into private pools of real estate. Many of the problems and risks associated with owning your own rental property can be eliminated through one of these products. Here are three benefits as to why pooled real estate investments may be a better way to invest your money:
1.Finding the Right Property
Location, location, location. Sometimes finding the right property is the hardest part of any real estate investment. Typically, when investing in a pooled structure this aspect of your due diligence has already been completed. Often, the professional asset manager has identified and analysed a particular property and its projected income. This saves you time from researching, viewing, and dealing with acquisition logistics (dealing with realtors and lawyers).
2.Hassle Free Ownership
When you purchase a rental property, you are the property manager, marketer and accountant for your asset. When you invest through a private pool, those aspects are all taken care of by management. You don’t need to worry about finding new tenants or unclogging your drunken tenants’ bathroom at 2 a.m. on a Sunday morning. From the time you invest your capital to the time you redeem your units; the asset is managed 100%. Leaving you to only think about, how you’re going to re-invest your earnings or when you want to redeem. Investing through a pooled real estate product truly makes passive-income a reality.
3.It’s Scalable
When property due diligence and maintenance are looked after, you’re able to purchase more types of real estate through other pools. Whereas if you’d wanted to purchase five separate rental properties, that’s 5x more houses you need to go view before purchasing, 5x more lawns to cut every month, 5x the number of tenants you need to find…. You get the point.
Ultimately, a private real estate pool is a clean way to get exposure to the real estate market. Private Real Estate pools offer a similar return profile without the legwork required to get into the investment and manage it. Its a simple and easy way to get your desired result without doing any of the work.
For examples of pooled real estate products, check out www.twosevenscapital.com to see the latest Canadian real estate opportunities.
