An Entrepreneur’s Guide to Real Estate Investing

Buying residential or commercial properties can be lucrative, but only if you're smart about it

Written by Robert Gold

For many entrepreneurs looking to build a nest egg for retirement, real estate holds a lot of appeal—especially in such white-hot markets as Vancouver, Calgary and Toronto. But it’s not something to go into blindly, according Cindy Daly and Kevin McCarthy, realtors at Royal LePage Real Estate Services Ltd. Johnston & Daniel Division, Brokerage, and the guests of this week’s BusinessCast.

If you’re looking to real estate as an investment—that is, something that will not be your primary residence, and that will contribute to your net worth—there are a few smart avenues to pursue. “I like to buy very manageable small residential investments,” says McCarthy. “Things like a triplex or a small apartment building.” Daly agrees, adding that condominiums remain a solid investment in cities such as Toronto, where rental buildings are relatively scarce. “Condos are a big thing for a lot of my clients,” she says.

Read: What Every Entrepreneur Should Know About Retiring Wealthy

Commercial real estate investments can also be lucrative, but they’re not for the dilettante: according to McCarthy, “It’s a different business model than residential. It requires a level of sophistication that the average investor may not have,” he says. You really have to have a solid business plan in place before you make your investment. You have to understand what is happening in the areas you’re looking in: what is the transportation situation? Is it an area of heavy immigration, or is it gentrifying?”

Whether you’re interested in commercial or residential real estate, Daly and McCarthy say there are three things you must do for your investment to be a success:

  • Know your area. This, Daly says, will make sure you know what you’re getting into. “Know what the trends are in that area. Know who lives there, where they shop, how they use transportation,” she says. “Know what you’re getting into.”
  • Have a well-articulated business plan. “Work within it,” says McCarthy. “Have a long-term vision, and, wherever possible, add value to the property.
  • Be trustworthy. Being a slumlord is not good business. “Keep your integrity with everyone you deal with,” says Daly.

For more of Daly and McCarthy’s thoughts, including their assessments of the best opportunities across Canada, check out this week’s BusinessCast, which you can listen to by clicking the button above or download by clicking on the iTunes logo below:

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Read: Warren Buffett’s Investment Secrets Revealed

Originally appeared on PROFITguide.com