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Advantages of Investing

 
 
There are many advantages to real estate investment. More people became millionaires through real estate than through any other vehicle! Why is that?

Let’s look at some of the advantages in detail:

 

Appreciation

Over the past century, real estate values have continually increased. There have, of course, been some periods where values decreased, but the overall trend has been nothing but up. Like anything else, the value of real estate is determined by supply and demand. Most people live in cities where for the most part, their need to socialize, earn an income, shop for goods and services, need for recreation, education and safe accommodation, are met. People are attracted to Ottawa because the different neighbourhoods have an ability to meet these needs to a high degree. There is a limited supply of land but the demand for it increases. So prices people are willing to pay increase.

Considered it another way. Shelter and community are basic human needs. People need places to live, work, and play. Communities are synergetic. They are ideal centers where the most needs are met for most people. The price of accommodation rises due to the competitive price buyers are prepared to pay in order to be a member of a specific community. In periods of high inflation, real estate values go up. Real estate is an investment that benefits from inflation. The value of land increases and the value of housing increases in tandem with the value of land. A great truism!

 

Leverage

A great thing about real estate is that you can tie up a big asset with a relatively small amount of money. You can easily buy a $100,000 home with only 10% ($10,000), or less, down payment. To illustrate the power of this, consider this example:

  • Suppose you bought $10,000 worth of gold, mutual funds, or some other investment. Let’s say that it goes up 10% for the year- not bad. Your investment is now worth $11,000. So your return is 10% of $10,000 = $1,000. Now let’s suppose that you “invest” that same $10,000 and put it as a down payment and buy a $100,000 house. Again, let’s say that it goes up 10% for the year of ownership. Your property is now worth $110,000!
  • Your $10,000 investment increased by $10,000. That is a 100% return on your money (not even considering the equity build-up resulting from the constantly decreasing mortgage, cash flow, or tax advantages)! In brief, this is the reason why wealthy people invest in real estate.

 

Tax Advantages

You can deduct, as an expense, interest on the mortgage, property taxes, insurance, repairs, inspections, and depreciation on your investment real estate – no matter how much you own. This should not be confused with the tax exemptions for personal residence.

 

Freedom

While there is management and record keeping required, it is nothing compared with some other investments. If you invested in a business such as a dry cleaners or a restaurant, you would be personally attached to the investment, putting in many hours of personal time. Real Estate investing can be done without too much interference with your current job.

 

Someone else pays for it

With Real Estate, the people who occupy your buildings are called tenants. You provide a service and they pay rent each month that you then in turn use to pay the mortgage. The tenants literally buy your investment property for you! When you invest in stocks, bonds, or precious metals, you may receive a dividend but it is no where near the return you receive when renting a shelter.

 

Cash Flow

Real Estate provides you with a monthly cash flow. This can be very significant income in a multi unit building.

 

Solid Asset

Real Estate is widely recognized as a solid investment to own. Like gold, it’s looked upon favourably by analysts reviewing your financial strength. Real estate is also easy to borrow against should you need extra capital.

Once you understand all of the advantages of investing in Real Estate, it is easy to see that very few investments can match the stability and flexibility of house and home. No wonder it is the favourite of millionaires! INVEST IN REAL ESTATE! Consider purchasing a second home to pay the future expenses of your child’s education when sold! Call for details.

An informative link to information on the Landlord Tenant Protection Act.

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