Purchasing and investing in real estate has always been attractive for those investing in real estate ontario are looking to generate additional income and benefit from the wealth created with increases in property values over time. Is investing in real estate right for you?
Diversification is key to anyone’s investment portfolio whether you are talking about mutual funds, TFSA’s, stocks, bonds, RESP’s, RRSP’s etc. Diversification helps balance risk and provides a level of confidence that your investments are still going to be there when you are ready to liquidate them, such as at retirement etc. Some would consider adding real estate, other than their principal home, to their portfolio to ensure full diversification. This return is generated from a combination of monthly income and property value increases. The monthly income is generated by taking the rent collected from tenant and then deducting all the expenses. To ensure that there is a positive cash flow, smart real estate investors work with a mortgage expert and real estate agent that can assist with the analysis.
Equity is built in the property by way of appreciation of value over time as well as with each mortgage payment. With mortgage interest rates at record lows and an abundance of potential tenants in many areas, there is a high demand for real estate investors to take the plunge. Essentially, as you pay down the principal of a mortgage, you’re reducing debt and building equity. Like any investment, there is risk and it is possible to lose money in real estate, albeit relatively low. Real estate has shown to appreciate steadily over the long term, and has for the past 25 years, so the chances of someone losing money on a purchase are pretty slim. Financing Options and How do I get started? One more attraction is the fact that it really only requires part of your time, is flexible, and the skills can be learned.
The process is relatively easy, and I’ll walk you thru that step by step. The first step is to build your Real Estate Investment Plan which would include talking about your acquisition and exit strategies and what you are most comfortable with to get you started. Call me for more information on how to see if you are ready to purchase a rental property and build your Investment Plan. Many real estate investors are advised to put your investment properties in a corporate name. So the title of the property will be in a corporate name but you, the investor, will be required as the owners of the corporation to also provide personal guarantees.