Top Ten Reasons To Invest In Real Estate

Investing in real estate can be an overwhelming thought for most people. The idea of finding a good property, in a good neighborhood, with a growing population, and then finding a trustworthy renter can seem daunting. But as overwhelming as this may seem, with a little effort comes great reward. With countless benefits to owning an investment property, here are our Top Ten reasons to invest in real estate:

10. The Choice is Yours

Residential or Commercial, multifamily or single family, hotels or offices? You get to decide. There are plenty of options out there, and doing some research will help you find the right property for you. Investing in a property that you are familiar with, will help calm the nerves that can be prevalent when making a big decision.

9. Value increases as it appreciates

As communities grow, so too does the value of your property. History has shown that real estate prices have continued to steadily increase over the years. The longer you hold onto your investment property, the more potential you have to get a high return. Which leads us into #8 on our list.

8. Long-Term Investment

Many people like the idea of an investment that can fund them in their retirement. Rental housing is one sector that rarely decreases in price, making it a good option for long-term investments. Real estate will typically increase in value as time goes on, compared to a savings account or an RSP that will lose value as inflation rises.

7. Positive Cash Flow

Many real estate investments offer positive monthly cash flow after your mortgage and other related expenses are paid. This cash flow will increase over time as your mortgage financing decreases incrementally and rental rates increase. This will create a growing source of secure retirement income for you.

6. Diversification

As the cornerstone of a well-balanced investment portfolio, diversification helps to offset volatility in any one particular asset class and ultimately reduces your overall portfolio risk. Investing in real estate is a powerful way for you to add a valuable layer of diversification to your investment portfolio.

5. Inflation Hedging

The inflation hedging capability of real estate stems from the positive relationship between GDP growth and demand for real estate. As economies grow and develop, added pressure is put on rental properties. This causes rental prices to increase, which will ultimately increase your revenue.

4. Leverage

Leverage simply means using borrowed capital to enhance the earning potential of an investment, and when compared to other investment classes, real estate delivers the greatest opportunity to use the power of leverage. Since real estate is a tangible asset, financing is generally more easily attained and your potential returns are heightened considerably compared to a non-leveraged investment.

3. Tax benefits

A number of deductions can be claimed on your tax return, such as interest paid on the loan, repairs and maintenance, rates and taxes, insurance, agents fees, travel to and from the property to facilitate repairs, and buildings depreciation. Also, when you own an income property, the interest on the mortgage payments is tax deductible. All this will help you save money when it comes to tax time.

2. Reliable Returns

While tradition investments such as stocks and bonds can provide exceptional opportunities for wealth, the inherent risks are evident with the markets constant fluctuation. Real estate, on the other hand, is far more consistent in terms of market volatility, it can continue providing you steady returns even during lulls in the economy.

1. Other Peoples Money

One of the hallmarks of real estate investing is the ability to use the rental income you earn each month to pay down your mortgage financing. This benefit is unique to real estate investment. Generally speaking, the rental income you earn will be sufficient to cover your mortgage payments and the other expenses associated with your investment unit.

There are so many more benefits we could have made a top 20 or top 50 list. What are your thoughts? Is there something that you think that should be included on this list? Maybe something should have been ranked higher? I would love to hear your thoughts.