The number of sales in January 2021 are up more than 26 per cent over January 2020, and the inventory is down by over 40 per cent.

What this means for sellers is that if your house is priced right you will be able to sell quickly. Average days on the market are down 14.1 per cent over January 2020.

With sales up, inventory down and prices only up slightly, we should start to see prices moving up more significantly through spring and summer this year.

This is great news if you are selling but can make things a little more challenging if you are buying, as you may find yourself competing with other buyers for the best properties.

It is always a good idea to have a discussion with your Realtor when you are thinking of buying or selling, as things are happening quickly in the market right now.

We have completed our journey through the EL CP TAR model of profit centres for real estate investing. I would like to dedicate this month’s Real Estate Corner to a review of all of the profit centres that we have discussed.

Equity is the difference in what is owed on a property and what its market value is. If you have a $500,000 house and you owe $200,000, then you have $300,000 in equity. It also means that if you can purchase a house below market value, because you find a great deal, you can get instant equity. For example, if you purchase a $500,000 property but you only pay $490,000 you just received $10,000 in instant equity.

Leverage, in real estate terms, means using other people’s money to buy real estate. If you purchase a $500,000 property and you put down 20 per cent, or $100,000, you can allow someone else to put in the other 80 per cent, or $400,000. There are many institutions that will loan you that $400,000, if you pay them back over time with a little bit of interest.

Cashflow is the king of real of real estate investing. Please keep in mind that every property will have cashflow. The question is which way is the cash flowing. When you are investing in real estate, you will want to ensure that your property is cashflow positive, which simply means it is adding money to your bottom line every month. There are some properties which are cashflow negative which means that in order to pay all the bills you will need to come up with some money out of your own pocket. That’s not a good situation to be in. Make sure money is flowing to you every month.

Principal Pay Down is that part of the mortgage payment that goes paying down the mortgage every month. Over time, this adds up to a significant amount.

Taxes are an area that you need to talk to your tax professional about. There are many different ways that you can use real estate investing to save money on taxes. Any expense that is associated with your property can become a tax deduction. Always check with your tax professional prior to making any tax-related decisions.

Appreciation occurs when the value of the property increases over time. This can happen in a few different ways, such as an increase in the population of a city or town or a new commercial development happening nearby. Appreciation is nice to have but I would suggest you don’t use it as your primary profit centre.

Reinvestment, using the money that you make on your real estate investments to purchase more real estate. You can do this by using a line of credit on the property to fund the down payment. This is a way to compound your earnings and really make your profits skyrocket.

(Brad Chisholm is a Realtor and real estate investor based in Saskatoon. You can find him at bradleychisholm.exprealty.com or at 306-220-2217.)

-Brad Chisholm