WHO’S RIGHT?
The simple answer is no one and everyone.
Are you more confused than ever? Welcome to 2020! There is an abundance of opinions from the experts (regarding real estate and Covid!). But how does a real estate investor make sense of all those opposing viewpoints?
Our businesses approach real estate from 3 different angles. So following the experts is mandatory! But lately the guidance is becoming more confusing than ever! It takes me back to our early investing days ….
I remember my first Real Estate Investing Network meeting. It was a Friday night, and I knew no one in the room. I took a seat quietly at the back. Some guy got up to speak and the crowd seemed to love him. Oh ya, he’s the author of that book my friend mentioned (Real Estate Investing in Canada, by Don R. Campbell).
The presentation begins, and within the first few minutes, Mr Campbell talks about how “there is no Canadian real estate market.” What? But I just read an article,…. And I saw a clip on the news about, …. Great, 15 minutes in and I’m completely lost.
Years later, in the middle of COVID, Mr. Campbell’s words simply couldn’t be more true. But luckily I understand a little more now.
Real estate, the housing market, and the rental markets are more regionalized than ever before. Let’s use Toronto as an example. The headlines are all about huge sales volume, great prices, boom-boom-boom. But when you dig a little deeper the story is a mixed bag. Toronto’s downtown housing market has seen significant drops in condo prices, and market rents are also dropping. At the opposite end of the spectrum, detached houses in the suburbs are selling at a premium, often in competing offers.
So what’s the point? Answering that age old question of “where to invest” is an even more complex task today, than ever before. There is no national, provincial, or even city-wide real estate market these days.
How do we process all the information and advice? We start with a country, then narrow down to a province, then a city, then a neighbourhood. We’ll ignore the inflammatory media headlines, but investigate the facts. We understand that we need a high level view of the data (GDP, employment numbers, etc…), but then we also need the “boots on the ground” view.
Media headlines are designed to get you to read, to click, to boost ratings. That is not helpful. But somewhere in those stories is probably a piece or two of information that is relevant to your investment strategy. Now, dig deeper (which really should have been the motto for 2020!). Is the information in the news even accurate? We try to go directly to the source(s) if we can.
“Boots on the ground” is an expression that we love. Nothing beats talking to the locals with respect to getting real time local information. Maybe that mega-development, that looks so good on paper, has been stalled for 5 years now! Maybe a lot of the student rentals are currently vacant because they used to be full of international students (that could be a pro or a con, depending on your current strategy). Maybe there is a re-zoning application that has been delayed at a municipal council level because of Covid. Only the locals will know some of these nuggets. If there is no sexy headline, those tidbits probably haven’t been featured in a news story—yet!
So you’re absolutely right! The information and guidance out there is incredibly confusing. Why? Because today, real estate is a more regionalized game than ever. Your research will need to be more area-specific than ever if you want to set yourself up for success. So who’s right?: thanks Mr. Campbell!
Connect with us at any time to chat about renovations @MtnEdgeRenovate or to chat about real estate investing @MtnEdgeDevelops.
