Five common mistakes to steer clear from when you're dipping your toes into real estate, whether for personal living or investment purposes.

Skipping the Mortgage Pre-Approval:
One essential step before venturing into property ownership is obtaining a pre-approval from a reliable lender or financial institution. This pre-approval establishes your budget based on your income flow, enabling informed decision-making regarding your investment. With a clear budget in place, your realtor can tailor the search to meet your aspirations as an investor or homeowner. A pre-approval boosts your confidence during negotiations and streamlines the screening process.

Lack of Investment Strategy:
In any realm, meticulous planning paves the way for optimal outcomes. The same holds true for real estate. As an investor, clarity regarding your investment horizon - that is, when you intend to sell or dispose of the asset - is crucial. Depending on this timeframe, your property choices, including the style, location, and age, will vary. Therefore, it's advisable to consult with a market-savvy realtor who can guide you based on your objectives and timelines. A planned approach rather than a random one can make all the difference.

Overlooking Closing Costs - LTT, Lawyer, Property Insurance, Moving:
The thrill of shopping for your property can sometimes distract you from accounting for the closing costs, an essential part of the purchase. In real estate, Land Transfer Tax (LTT) is a significant closing cost, typically ranging from 1.5-2% of the property's purchase price. If you're a first-time home buyer in Ontario, a $4,000 LTT rebate is available.  For example if the purchase is say $800,000 the LTT payable on closing will be $12,475, if you were a first time home-buyer it would be $8,475.

Apart from LTT, other expenses include legal fees, home insurance, moving costs, title insurance etc. Accurate budgeting for all this will avoid you any surprises at the final completion.

Overpaying for a Property:
Ensure you don't end up overpaying for a property. The purchase price should reflect the current market conditions, and emotional attachment to a property should never inflate its cost. A patient approach can save you from paying an inordinate price, even if it means losing out on a specific property. The abundance of real estate inventory means there's always another property just around the corner. Overpaying can compromise your financial safety if the market shifts downward.

Embracing a 'Get Rich Quick' Mentality:
This mindset can be a significant pitfall in real estate. It's a long-term commitment rather than a ticket to immediate profits and positive cash flow. Giving your property time to mature allows you to build equity in your investment. Immediate profits might occur with impeccable market timing, but patience is generally your best ally for reaping substantial benefits.

?Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate and we will do our best to help.


Mudit Mehta 
Broker of Record
ELIXIR REAL ESTATE INC.
Off: 416-816-6001 | [email protected]