Stop, listen and research! In this episode of Investor Insight, CREW TV identifies the essential research any investor needs to conduct before moving into a new market, whether that's Western Canada or, what's increasingly the case, the U.S.A.
CREW's Jemima Codrington talks to Leslie Quinsay of Coridian Capital and Marcel Greaux, co-founder of the Toronto Real Estate Club.
Video transcript below:
Jemima Codrington: Decisions, Decisions! But, first and increasingly so does Planning, Planning! Hi, I’m Jemima Codrington and welcome to this week’s instalment of Investor Insight on Crew TV.
Property investors tend to be go getters by the [slice of time] and challenges creep in, they need to stop and assess. To keep on to this is laying the groundwork to enter new markets.
Leslie Quinsay, Director, Coridian Capital
Leslie Quinsay: Investing at a distance comes with many challenges and it’s something I have experienced firsthand. You are not physically present and you may not be familiar with the areas that you are investing in. So, my recommendation is actually before investing your money there, take the time to travel out there and build a support team that will ensure that your properties are well managed, that there are people there that can keep you upto date on what’s changing in the neighbourhood or a region and that can also take care of your tenants. So, you need to make sure that overall, even though you are not physically present, your properties are being managed well and your tenants are happy and you are running it as a strong business.
Jemima Codrington: But before you went to another province or even another city, investors still have some homework to do. Warning it involves a computer and likely hours of research.
Marcel Greaux, Co-Founder, Toronto Real Estate Club
Marcel Greaux: So, in this market, particularly the condo market, it is absolutely essential you look at few key factors. One, I would say is run a Proforma. I am surprised at how many investors do not do this before they purchase. So what are your rents, what are your expenses and even stress test your portfolio, right. You know, run your mortgage with a 25 year amortisation and a 4 or 5% interest rate and see if your cash flow [before a new close].
The other thing is, matrix. There are 3 things I look at. What is your price compared to the resale market that you are buying in? What is your price compared to the occupancy within the area and what is your price compared to other new builds that are coming on the market. If you can fall under all 3 of those matrix, then it is likely that you got a good price in addition to getting access directly from the developer.