BC real estate is projected to experience sustained growth throughout this decade judging by the increasing number of Millennials that are real estate investing in the Vancouver BC market. Vancouver home and condo prices, however, have undergone a major increase in the last decade or so and owning property for Millennials could prove to be a daunting process. Yet, B.C. and Vancouver are named Canada's No. 2 place for millennials to do real estate investing. For skeptical buyer, this is the most important and largest financial decision they will ever make, and it should be undertaken precisely, investing largely in time and energy. I hope this beginners guide to real estate investing in Vancouver is a good start:
Adding extra effort to be financially literate, will definitely save you many dollars and make sure you make solid decisions for long-term financial security. To help you dispel common myths about buying in real estate, here’s a breakdown of things millennials should clearly know when buying property in Vancouver. So let’s dive in…
1. How to get into real estate investing in the Vancouver property market – do your homework properly: study the basics of savings, credit, and budgeting.
Making the plunge into real estate investment in Vancouver is quite a big ordeal. First things first - Lifelong savings is a delicate and crucial ingredient to financial security. You must spend less than you earn, ideally saving fixed 10% of the entire gross income. Discipline yourself to save and ensure to deduct the 10% of every paycheck you receive. Money saved cannot lead you into the temptation of impulse buying.
Next, you also need to build a decent credit record. This is an essential part of how to get into real estate investing in Vancouver. Moneylenders want to see a dedicated record of your ability to pay your monthly bills promptly. Grasp your credit card; pay your rents and bills in full and on time to win the lender's trust. I don’t know how I can stress this but, It’s advised not to run up many credit cards with debt, the interest rates are exorbitant and the beneficially is your bank obviously. Always keep your credit card balances well below their credit boundary. Do this and you will well on your way to showing the banks that you are capable of handling debt - this will be critical for you to qualify for a mortgage for investing in property in Vancouver.
For every 6 months use Equifax to do a credit check to learn your credit score and to evaluate any unseen problem that may arise. Equifax application tracks all your card’s history which includes car loans, school loans, computer loans and credit cards just to mention a few. Equifax grading algorithm grades you based on your usage and credit payments.
Simply, managing your credit usage is not sufficient without an outlined budget. With easily available online budgeting application, it’s relatively easy to manage things up. You clearly need to track and cover the holes of wastage and create more saving opportunities. In British Columbia it is quite easy to use Equifax to monitor your credit so you can be better prepared for purchasing that home with a clean whistle credit!
2. Make a real projection of future lifestyle and clearly understand, the basics of selecting the right property you deserve.
Money Lenders want to clearly see stability in your job and needless to say, two years of steady income, before getting the mortgage. Mortgage denial also implies when you change work frequently from one business to the other. A steady continuous employment in one field will increase your chances of getting the mortgage. In situations where individuals run their own business, an experienced expert is needed to qualify you for the mortgage.
In today’s world, securing a job for a year is not as easy as you might think. Take a realistic view of years to come; will you remain in the same environment? The answer will determine the residence, space and its location you need and the best mortgage for you. Proper financial planning is the overall key, especially in an expensive city like Vancouver.
3. How to start real estate investing in Vancouver: Engage in a team of qualified professionals to guide you through.
No one is an island in this field. You need an accredited real estate agent and a mortgage professional. These well-experienced financial planners understand the fluctuating mortgage market. Take a considerable amount of time with them to learn about the trade. They will give you real ideas of qualifying for a mortgage combined with your little saving. Before you decide on a property, make sure you clearly understand your position on the mortgage front. It’s vital to get a pre-approved mortgage before you decide on a Vancouver property. When you begin asking how to start real estate investing in Vancouver, you are really asking how do I build my network to open the way to success.
The next step is to engage a Vancouver real estate agent who clearly understands the market and process of the property purchase life-cycle, after securing your mortgage process. On-site, ensure that the house has lasting value. Once satisfied and decided on a property, contact a home inspector (key process), real estate lawyer and an insurance agent.
4. Closing costs, down payments, basic upgrades and moving expenses needs to be clearly understood to avoid heartbreaking surprises.
The size of your down payment is the key. The greater the better, new property owner need 5% of the purchase price and anything lower than that will require the buyer to pay a hefty loan. In BC if you have less than 20% you may be faced with an insurance premium. This will add to your cost monthly on your mortgage. Also, your money Lender will want to verify the source of your down payment. Typically the funds needs to be in your account for at least 3 months.
As previously pointed out from the beginning, saving 10% of your monthly stake now comes to reality. For many young couples, parents and friends are the easiest targets to assist in. The down payment is only part of the upfront cost. You are likely to pay 2-4%of the purchase price of your Vancouver home in closing costs. It is also vital to stay aware that there may be some essential upgrades and lastly some moving costs.
5. Finally, the economy trend when purchasing the property plays an important role.
This is true for any type of property in Vancouver, condos, apartments, or any type of investment properties in British Columbia. Just like the prices of common commodities, the overall economy of the province immensely affects the value of housing. The old adage goes, values grow where people go. Whether it's built property or land. It’s important know the indicators affecting the economy. In British Columbia, the economy is one of the best performing in all of Canada.
Additionally in the next 2-4 years there may be some easing of prices with the Vancouver market due to government regulations which may provide millennials with the opportunity to buy in the lower mainland. Another way Millennials could investment in real estate is to also undertake this is by forming limited or single partnerships or “joint ventures” or “rent to own schemes”.
As I conclude, allow me to underline what Millennials need to know about buying in real estate: Take Action. Experience, it is often said, is the best teacher. I agree. However, in case you have none, then just take action! From inexperience, you will have gained the insight of action!
If you look far back enough in the Vancouver BC market statistics, it seemly indicates quite conclusively that now is the ideal time to purchase that dream home in Vancouver. After all, the market has proven itself well over 40 years of with consistent gains. It hasn’t gotten there in a straight line, but over the years it has proven to be one of the best and safest investments out there.