How to Invest in Real Estate Without Fear of Rejection
The Canadian real estate market is hot – and you want in. But you know there can be many hoops to jump through before you score the investment property of your dreams. And one of the last, most frustrating hoops is making an offer…only to have it rejected, Unfortunately, that happens a lot.
Reasons for rejection
Putting in an offer on a property that you worked hard to find and having it rejected can be tough to take. Perhaps there was a counteroffer, but a rejection by the seller may catch you by surprise. Why would your offer be rejected? Here are the most common reasons:
1. Your offer was too low
Many sellers would counter a low-ball offer in hopes of driving the price higher. But some sellers may just throw out that low offer altogether, especially if they hear of other buyers willing to go higher. And if your offer was very low, and insulted the seller may be unwilling to entertain it at all.
2. Your finances are weak
These days, sellers want to make sure that prospective buyers are at least pre-approved for a mortgage to finance the purchase. If you haven’t spoken with a mortgage specialist yet, there’s no way for the seller to verify whether or not they’re wasting their time with your offer. Instead, they’ll be much more willing to accept an offer from a buyer whose finances are already in order.
3. Your deposit was too small
While your purchase price is a key component of your offer, the seller will also consider the size of your deposit. A large deposit shows the seller that you are financially strong: capable of supporting a home purchase. A small deposit looks weak and could scare off the seller.
4. Your closing dates don’t line up
Matching closing dates help smooth real estate transactions. For instance, sellers who have already bought a new property may want a short closing date so they’re not stuck with two mortgages. Or perhaps the seller has yet to find another home and doesn’t want to risk having anywhere to go. In this case, the seller may want a longer closing date. Either way, if your proposed closing date doesn’t align with the seller’s needs, your offer may be rejected.
5. The seller maybe unwilling to compromise
If the home inspection reveals issues with the property, you may request to have the seller make repairs. But if the seller is unwilling to put in any more work on the home before selling and you can’t reach a compromise, your offer may be rejected.
Aside from the outright rejection of your offer, there are other difficulties that you can encounter in a competitive market, such as bidding wars. But the biggest hurdle to investing in real estate is money. These days, real estate prices are through the roof, especially in certain cities. Many would-be investors simply don’t have the financial means to get started, especially if they are buying a property on their own.
Fortunately, there are other ways to get a foot in the door – even with minimal capital – including “fractional” investing.
Fractional investing in real estate
In fractional investing, several parties purchase the property: each has its own share and each assumes its share of the risk. For instance, if a property sells for $500,000 and you put in $10,000, you own 2% of that property.
Unlike full ownership, fractional ownership allows investors to diversify their portfolios, reducing risk while getting access to high-value assets. It also eliminates many of the hassles: searching for properties, putting in offers, managing tenants, and maintaining the property.
Who offers fractional investment?
Fractional investing reduces the barriers to entry for investors just starting out in the real estate market. But where can you find these investment opportunities?
BuyProperly is an online platform for fractional real estate ownership: it gives investors with limited capital – as little as $2,500 – the chance to buy into a property without the headaches that usually come with being a landlord.
The expert team at BuyProperly thoroughly vets the high-value, high-growth, buy-to-let properties available for investment. And BuyProperly’s local property managers handle “landlording,” hassles: maintenance, improvements, tenant searches, rent collection…..
Investors can earn monthly rental dividends while watching the property value grow over time. If or when the property is eventually sold, all the investors can capitalize on the increase in equity.
Benefits of fractional ownership
There are plenty of reasons why investors — particularly beginners with minimal capital or experience — might want to go the fractional investment route:
- Minimum capital needed. Traditional real estate deals require tens of thousands of dollars (or more); fractional investing requires as little as a couple of thousand dollars to get started.
- Increased diversification. Adding a real estate property to your investment portfolio is a great way to help you hedge against risk.
- High return potential. Real estate is known to increase in value over time: this can help increase your returns, especially as renters help pay the mortgage.
- Asset tangibility. Unlike stocks, real estate is a real-world asset, which can offer both growth potential and intrinsic value.
- Tax breaks. When the property is eventually sold, you’ll get taxed only on capital gains, rather than having your entire return taxed as income.
How do you earn returns with fractional ownership?
Like any other type of real estate investment, fractional ownership pays out in two ways:
- Through rental income. Depending on how much you invest and your exact share in the property, you’ll collect rental income relative to your share.
- Profit when the property is sold. Over time, the property will likely increase in value, which helps add to your equity in it. You’ll be able to recover your initial investment, plus your share of any profits.
Should you invest with BuyProperly?
If you’re interested in investing in real estate but haven’t yet, because of done so because of all the hurdles, BuyProperly may offer a solution.
In particular, BuyProperly may be an ideal investment platform for those who:
- Want to invest a modest amount of money
- Want to avoid managing the property and dealing with tenants
- Want to diversify their investment portfolio
- Want help choosing the right property to invest in
Our final thoughts
There are plenty of benefits to investing in real estate: passive income, regular cash flow, tangible assets that grow in value, investment diversification, and tax advantages. But getting involved in real estate investment can be tough for many. BuyProperly makes getting your foot in the door is much easier. You can start investing with as little as $2,500 and see potential annual returns of 10–40%. And you can kiss that fear of rejection goodbye.