Are you speculating or investing in Edmonton real estate?

Opportunists are laying in wait for the real estate market in Edmonton to heat up. There's a cycle of highs and lows, and we're due to start rising again. People looking to make a quick buck are attracted to a heated market and are waiting for the temperature to start rising again for Edmonton real estate.

Regular folks can also get caught up in a frenzy sometimes, as their home values rise and suddenly there's more equity in their home that they can invest in more real estate in an attempt to gain some ground.

Here's the Scenario

With so many new condominium developments around Edmonton in the pre-selling phase, it's tempting to buy more than one unit, put a 10% deposit down on each of them, and then sell when the project is completed. So, let's say you take $150,000 and put a $50,000 deposit down on each of them. The hope is that while the building is being constructed, the market has improved and the value of each unit gains about 10%. That means you have doubled your investment just by sitting on them during construction.

Is it possible for this to happen? Yes, it could happen. Is it a guarantee? No — that's why it's speculation and not an investment. It's a guess about the future and an idea.

To truly succeed over the long term and reduce risk, you should take the guess-work out of where you choose to put your money. Don't "time" the market and predict pricing. You're much better off to focus on what's in front of you and on the fundamentals. Go for something that's going to give you positive cash flow. Make your property truly appreciate by renovating and other value-adding activities rather than hoping the market makes your property appreciate. Otherwise you might fall into a trap, just like thousands of people did in 2008.

Investments that create cash flow

If you're serious about investments with reduced risk, take your real estate dollars and put it into something with a proven stream of revenue.

Consider what your monthly net might be if you purchased a rental unit or a four, six or eight-plex. Charge rent that is true market value but enough to cover your mortgage. That mortgage is paid for by your tenants and goes towards building equity plus extra creates that cash flow.

A good investment will keep cash coming during a slump and the changes of having to sell (at a loss) are pretty slim.

If your property happens to gain in value during the years you own it, it's a bonus. It's a perk to your investment.

If you have an appetite for risk, you might prefer the excitement of speculation but if you're more conservative in nature and just starting out in your investment journey, a duplex or apartment complex might be a safer, albeit boring alternative.

Long time investors know that they have less control when it comes to speculation. You've put your money in the hands of the government, of politicians and banks. You have more control when your investment is in ink, on paper where your actions have influence.

It's the old story of the turtle and the hare, where the turtle is slow and steady — maybe boring, but he gets the job done. The hare is exciting and fast and dynamic but not as stable and we all know who wins that particular race.

If you're ready to be a slow turtle and are interested in seeing the most boring but stable investment properties in Edmonton, call your real estate agents today and start your hunt for cash flow properties in our city.