Learn the tricks of the trade with Scott McGillivray
If you’re renovating a dated income suite on a limited budget, what cost-effective changes could you make to increase your rental potential?
One of the best returns on investments would be changing the flooring. Flooring is typically one of the worst things in an old income suite and that can be upgraded with a vinyl floor, or a laminate. Typically I would say you want to pick something affordable but durable — solid surfaces are ideal for an income suite.
What is one of the most common mistakes you see homeowners make when renovating an income property?
I think that a lot people, especially new investors, underestimate the rental market and the caliber of the tenant pool. They think ‘I’ll just do all the super basics and then I’ll get someone in here to give me a little bit of money.’ The truth is some of the best money to be made in real-estate investing is in the higher end of the market. Basically, the caliber of your space will dictate the caliber of your tenants. If you spend a little bit more and make the space the best possible rental unit, you can increase your rental potential significantly.
Does renovating a vacation rental differ from remodelling a suite designed for long-term tenants?
Absolutely! In fact, the entire next season of Income Property has been dedicated to vacation rentals. Some of the biggest differences are that they need to be rented furnished, they are rented on a short term basis, and you’re usually cleaning them/refitting them between tenants. In addition, you’re able to charge a significantly higher rental rate.
On your show you present two options to the homeowners for a possible redevelopment. One option is generally grander in scope. Does spending more money always result in a higher return on investment?
This isn’t always the case. Obviously spending more money is going to get you more of an upgrade or bigger renovation, but that doesn’t always mean that a larger renovation will have a greater return. There is a sweet spot where you get your maximum return on investment. The ‘perfect recipe’ I guess you could say.
If you were purchasing your first income property, where in the GTA would you make your investment?
Some of the best opportunities are just outside of the GTA. We’ve been doing vacation properties that have tremendous cash flow. Better than you would see on just about anything you would find in the city at the moment. And that’s been out in the Kawarthas, Collingwood, Prince Edward County. We are also seeing great return in the long-term rental market of Bowmanville, Georgetown, Hamilton … but I don’t want to give away all my secrets, hahaha!
What would be your number one tip for homeowners wanting to offset their mortgage payments with a rental suite?
I think the best tip for real estate investing is that it’s not about trying to time the market, it’s about time in the market. That means, if you have any reservations or hesitations to become a real estate investor, you are only penalizing yourself. If you are thinking about becoming a real estate investor the sooner you do it the better. I have worked with literally thousands upon thousands of real estate investors across North America, and the ones that have been working with me the longest are the ones who have made the most money. That’s because it’s a long-term strategy. The longer you delay the opportunity, the more money passes you by.
The 11th season of Income Property premieres on March 9th on HGTV Canada. This season Scott McGillivray helps homeowners tackle a brand new investment challenge — vacation properties and cottages! Watch weekly to learn the best ways to navigate this exciting investment opportunity. In addition, you can see Scott live and learn more about the incredible world of real estate investing at the Wealth Tour event that is touring across Canada. At this exciting free event, Scott McGillivray will walk you through his lifelong journey of investing and renovating, and show you the strategies to win in real estate.