Real estate investing: How to start investing in property

Buying your primary residence is one of the most common ways to invest in real estate.

Instead of paying rent and covering your landlord’s mortgage, you’re building equity in a home of your own. Over time, as property values increase and you pay down your mortgage, your net worth grows.

However, with the rising price of real estate (and wages not keeping pace), owning a home is getting harder to achieve.

You must weigh the costs of buying a home, including mortgage, property taxes, insurance and maintenance (and replacement) of your roof, furnace and other appliances. The money you would otherwise be putting towards your retirement is now going to fixing a leaky roof thus delaying walking away from work. 

When searching for a home, look for key indicators of a solid investment: a good neighbourhood with low crime, easy access to public transit and highways, and a reputable school district. Proximity to amenities like shopping, restaurants, and parks can also boost property value. If you’re unsure where to start, check out some of the best places to invest in real estate in Canada.

Most buyers don’t have the cash to buy a home outright, so you’ll need to save for a down payment and get a mortgage.

While the Home Buyers’ Plan (HBP) lets first-time homebuyers withdraw up to $35,000 from their RRSPs tax-free, the First Home Savings Account (FHSA) is often the better option.

The FHSA offers tax-deductible contributions like an RRSP, but unlike the HBP, withdrawals for a home purchase are completely tax-free and don’t need to be repaid.

Also know that you can invest within an FHSA, allowing your savings to grow faster than in a traditional savings account. Here's some of our favourite trading platforms in Canada. 

TD Direct Investing	CIBC Investor's Edge	Questrade
◦ Trusted big bank with strong financial stability ◦ Wide range of investment options for FHSA ◦ Seamless integration with other TD accounts	◦ Low trading fees for self-directed investors ◦ User-friendly platform for beginners and experts ◦ Access to research tools and market insights	◦ No annual fees on FHSA accounts ◦ Commission-free ETF purchases for cost savings ◦ Easy online setup with low trading costs
TD Direct Investing	CIBC Investor's Edge	Questrade
Go to TD Direct Investing	Go to CIBC Investor's Edge	Go to Questrade

House flipping can be highly profitable when done right. The strategy involves buying a fixer-upper, renovating it, and selling it for a profit. However, while it may look easy on TV, house flipping comes with risks, from unexpected costs to market downturns.

To maximize your return, focus on high-impact renovations. Kitchen remodels, bathroom upgrades, new insulation, energy-efficient windows, furnace replacements, and roof repairs may cost more upfront but significantly boost resale value. Cosmetic improvements like fresh paint, upgraded fixtures, and new flooring can make a home more attractive without breaking the budget.

Partnering with a trusted contractor or tradesperson can help mitigate risks. If you’re not handy yourself, you can act as the investor and project manager while they handle renovations. A reliable partner ensures work is done efficiently and within budget.

Before purchasing a property to flip, always conduct a thorough home inspection. A standard inspection may not catch costly issues like structural damage, old wiring, or plumbing problems, so consider a more detailed inspection. Uncovering major faults before purchase can save you from costly surprises down the road.

Success in house flipping depends on careful financial planning. Speak with a realtor to gauge the potential resale value before making a purchase. Compare estimated renovation costs to projected selling prices to ensure you can turn a profit. When done strategically, house flipping can be a lucrative way to invest in real estate.

Investing in rental properties can provide steady cash flow while building long-term wealth. The key is to buy rental property in a desirable location—one with low vacancy rates, access to public transit, and major employers nearby.

Owning a rental property is an active investment, but you can decide how hands-on you want to be. Managing the property yourself allows you to maximize profits, but hiring a property manager can take the stress out of dealing with tenants and maintenance.

Financing a rental property isn’t the same as getting a mortgage for your own home. Lenders often charge higher interest rates, and you may need a down payment of at least 20%. That’s why it’s crucial to compare mortgage rates and lenders. Online mortgage brokers like Breezeful can match you with multiple lenders, helping you secure the best deal while saving time.

Carefully calculating your costs—including mortgage payments, property management fees, taxes, and maintenance—can help ensure that your rental income outweighs expenses. Done right, a rental property can be a powerful wealth-building tool.

Related: Best mortgage lenders in Canada

Carefully calculating your costs—including mortgage payments, property management fees, taxes, and maintenance—can help ensure that your rental income outweighs expenses. Done right, a rental property can be a powerful wealth-building tool.

A vacation rental property can serve as both a getaway and an income-generating asset, but it requires careful planning.

If you’re buying mainly as an investment, location is everything. Properties near lakes, mountains, or popular tourist destinations tend to generate higher rental demand. In Canada, vacation rentals are typically subject to different tax rules than long-term rental properties, with potential GST/HST implications.

If you’re investing in the U.S., you may need an American mortgage broker and should be aware of local tax laws and short-term rental regulations.

Securing financing for a vacation rental often requires a larger down payment — typically 20-25%. Lenders assess whether you’ll be cash-flow positive based on projected rental income versus expenses.

A smart approach is to use the BRRRR strategy (Buy, Renovate, Rent, Refinance, Repeat) to maximize returns by improving the property’s value before renting it out. Before purchasing, analyze local short-term rental demand, average nightly rates, and occupancy levels to determine profitability.

Running an Airbnb can be lucrative, but it’s not passive income. You’ll need to handle guest turnover, maintenance, and local compliance rules.

Pros include higher rental income potential compared to long-term leases, flexibility to use the property yourself, and a broad guest market.

Cons include fluctuating demand, potential property damage, and time spent managing bookings.

Many investors hire Airbnb management companies to streamline operations, but that comes at a cost. If you’re considering this route, ensure your property aligns with local short-term rental laws and has the amenities guests expect to secure consistent bookings.

You don’t have to own a non-owner-occupied rental property to become a landlord. Thanks to short-term rental websites like Airbnb, you can rent out a spare bedroom in your residence and make some extra cash. Just be sure to check with your municipal bylaws and condo board rules (if applicable) before renting out your place, as more and more cities are imposing tougher restrictions.

Also, you’ll need to inform your insurer that you have a lodger. Short-term tenants may not treat the property with the same level of care as you would, so your home insurance premium will likely increase to reflect the additional risk incurred by the insurer.

Real estate crowdfunding allows investors to pool their money to invest in larger projects without the need for direct property ownership. Platforms connect investors with developers looking to fund residential and commercial properties. This passive approach lets you benefit from real estate appreciation and rental income without the responsibilities of property management.

Most crowdfunding platforms require a minimum investment, but they offer diversification by allowing you to invest in multiple properties at once. However, these investments can be less liquid than publicly traded REITs, meaning your money may be tied up for several years. Before investing, research different platforms, their fees, and the projects they fund to ensure they align with your financial goals.

Related read: Best real estate crowdfunding investment platforms in Canada

A Real Estate Investment Trust (REIT) allows you to invest in real estate without buying property. REITs own and operate a range of commercial and residential properties, including office buildings, apartments, hospitals, and shopping centres. Investors earn returns through dividends and potential price appreciation.

Publicly traded REITs can be bought and sold on the stock market, providing flexibility and liquidity. If you’re concerned about risk, consider a diversified REIT ETF that spreads exposure across multiple properties. Some robo-advisors, like Questwealth Portfolios, offer pre-built ETF portfolios that include REITs, making it even easier to invest without picking individual stocks.

Related read: Best ETFs & How to invest in ETFs

Private REITs, on the other hand, are less accessible but may offer higher returns. Before investing, research a REIT’s stock price stability and dividend history to ensure it aligns with your financial goals. If you prefer a hands-off approach, an online brokerage like Questrade allows you to buy REIT ETFs at a low cost, helping you build a diversified real estate portfolio with minimal effort.

Related read: How to invest in REITs

Investing in commercial properties—such as office buildings, retail spaces, or industrial facilities—can generate steady rental income and long-term appreciation. While commercial real estate typically requires more capital and expertise than residential investments, it also offers higher returns. Investors can buy commercial properties outright, join a commercial real estate fund, or invest through a REIT specializing in commercial assets.

 You can technically invest directly in commercial properties, but most of us don’t have a spare $1 or $2 million to go toward the hefty down payment (at least, not yet). The more realistic way to invest is through a commercial real estate company’s mutual fund or ETF.

Are you sick and tired of the banks making all the money from mortgages? Then why not get a piece of the pie yourself? With private mortgages, you essentially become the bank. You loan your money to a homeowner just like the bank would. A borrower might seek out a private mortgage because they don’t qualify at one of the big banks, perhaps due to a bruised credit score or a low income. The easiest way to find prospective borrowers and loan out your funds is with the services of a mortgage broker.

Unlike a mortgage from one of the big banks, you can expect to earn a higher interest rate, potentially making it an attractive investment. Just remember that with a higher interest rate comes higher risk, as these borrowers may have been turned down by the big banks for good reason. You’ll want to do your own due diligence to make sure you’re investing in a trustworthy borrower and a rock-solid property. Someone who’s trustworthy may have a lower credit score due to an unpreventable event in life, such as an illness or injury, but has a consistent track record of paying their debts on time and in full outside that anomalous circumstance.

Another way you can become a mortgagee is via a vendor take-back mortgage. A vendor take-back mortgage is where you, the seller, own the property and lend the money to the buyer to purchase it. Though relatively uncommon these days, vendor take-back mortgages are certainly an option if the buyer is running into difficulties closing a home sale. A vendor take-back mortgage can benefit the seller as well since it allows them to close on the property. The seller may have already purchased another property, and they need the equity from the home that they’re selling to close on that.

Before going ahead with a vendor take-back mortgage, it’s important to be aware of the risks that come with it. Mainly, you could be liable if the buyer is ultimately unable to pay for the mortgage for whatever reason.

Looking for a passive way to invest in real estate? Then you might want to check out pre-sale condo assignments. A pre-sale condo assignment is when you, the investor/buyer, sell your rights to a completed condo to another buyer before the condo is complete. It’s called an “assignment” because you sign your rights to the new buyer. Condo assignments tend to be popular in hot real estate markets like Toronto and Vancouver where home prices appreciate faster than the rest of Canada. Please note that condo developers sometimes charge a 1% assignment fee for anyone looking to do this.

In terms of indicators, you’ll want to buy a condo in an area where condo prices are expected to continue to rise in the years to come. Your best source for that is by doing your own research about other future developments planned in the area and by speaking to a knowledgeable, local realtor.