Investment in PEI Real Estate

As a member of perhaps not the oldest profession, butcertainly an older one, I see many of my clients, as indeed I do myself, investin real estate here on PEIand make money. They generally purchase a number of properties, usuallysmaller, more run-down rental properties, but in some cases recreational orwaterfront cottages and turn these into money makers. As well as positive cashflow they are building equity which they can later cash in on.

PEIis a great location for the novice investor to get started. Properties aregenerally less expensive and while they have risen over the years and continueto do so, the up and down movement is not so great and therefore PEIreal estate offers an investment scenario more suited to the beginner.However with land prices throughout Canada on the rise again, and Inotice a larger recent rise in home prices here, you can be sure that you willstill have a solid investment.

Real estate offers much greater potential to make money thanmany other forms of investment and does not generally require the services ofmanagers as in the case of mutual funds. You will want to carefully researchyour market potential and you will, in the case of PEI, first of all decide whether you will bebuying residential properties to rent year round or cottages which rent at muchhigher rates but only for the summer.

It is important when deciding what to invest in here on PEI to determine theamount of money you have on hand and what you can afford to invest for the"long-haul", say anything up to ten years. Some investors get caughtin the liquidity crunch and need to get their money out of the investment in ahurry. This means selling early and at a disadvantage and can result in losses.

If you feel this might apply to you then you should probablyrefrain from getting into the cottage market. The properties cost much more,are harder to re-sell in a hurry and require more work to rent. Small familyrental homes provide year round income, require less maintenance havingresidents year round, and are generally easier to sell should you need to.

If you own your own home now then you are already a PEIreal estate investor. If you have a sizeable equity built up in yourhome you can use this equity to smooth the mortgage application. Most investorsare going to buy several if not numerous properties as they build their realestate portfolio and they are going to have to use that portfolio as financialleverage to acquire the next property. So you will probably start with your ownhome now!

The cities of Charlottetownand Summerside on the island offer a good selection of current single, duplexand triplex home rentals. Of course you can purchase some of the largercharacter homes and convert these to apartments. It is a good idea to look forhomes that are in need of repair. Some owners will sell just because they don’thave the cash or desire to fix up a rental and it is getting to the point whereit will need fixing to be rentable.

If this is the case make sure that you do your home-work andknow the condition of the home and the cost to repair. Bring in a homeinspector and make sure that you get quotes from reputable contractors on thework recommended.

Also ensure the neighborhood is suitable - however theisland neighborhoods are generally good, the "bad neighborhoods aren'treally "Bad".

Do your research and you will be growing your income througha steady stream of rental payments and your real estate portfolio will bebringing you that much closer to retirement.