Top 5 Reasons Why Real Estate Investing Rocks!

As Donald Trump once put it, real estate is always a good investment. He is one of many that have made millions by climbing the property ladder. Whether you’re looking to be the next Trump or improve your financial security with a few properties, real estate investing has benefits that no other investments can offer.

Here are just a few reasons why, simply put: Real Estate Investing Rocks!

1. Flexibility: There are a variety of types of real estate investments that offer flexibility and multiple uses, and you can even live in your investment. For example, you can buy a cottage and rent it out when you’re not using it. You can purchase a property when your kids go off to University and rent out rooms to their friends to offset the cost. For the first time buyer, taking their first steps on the property ladder, you can purchase a duplex and rent out the other unit to help pay your mortgage payments. The possibilities are endless. Real Estate is the only investment that offers this flexibility. After all, you can’t very well live in a Mutual Fund or a Canada Savings Bond!
2. Steady Appreciation: Recent statistics for Northumberland show that the real estate market has been increasing at 4.5% per year. While this doesn’t sound like much, over 10 years this is a 45% return. If we put that into real numbers, say you purchased a property for $200,000, with a 20% down payment of $40,000. Based on our local market appreciation, over 10 years that property will increase in value by roughly 45% or $90,000. This would have more than doubled your initial investment of $40,000. There are few investment options available that can provide that growth over a 10 year period, without requiring you to take on significantly more risk.
3. Leverage: Probably the best thing about real estate investing is that you can use other people’s money to do it. To put it into context; imagine trying to buy stocks or gold by using a 25 year, fixed rate loan. Not going to happen.
4. Cash Flow: Another wonderful thing about real estate investments is that it can provide cash flow; not only does your investment appreciate over the long term, but it can also provide near term monthly cash flow. For example, assume you purchase a property for $200,000 that provides rental revenue of $22,000 per year, and after your expenses and mortgage payments have been made, there is left over cash of $6,000. This cash flow is money that your investment has paid you; you could reinvest into another property, or perhaps take a family holiday that you otherwise wouldn’t have been able to afford. 
5. Tax breaks: Now who doesn’t want to pay fewer taxes? Real Estate can offer a very tax efficient investment return. You can write off repair and maintenance expenses for your properties, and if you have a home office you can deduct a portion of your property taxes or mortgage interest against taxable income. Finally, because of a special rule in the Income Tax Act (the Principal Residence Exemption) gains on the sale of your principal residence are reduced, often to $0.

These are just 5 of the many benefits of Real Estate Investing, but as with everything in life, there are good investments and bad investments. Be sure to enlist the services of a qualified and knowledgeable real estate broker when considering real estate investing.

For more information on real estate investing you can contact me anytime at pennington.remax@gmail.com