If you want to make money—big money—you need to focus on investing in real estate. In fact, this type of investment can make you rich rather quickly. You just need to know what practices to follow and contact a real estate agent for assistance and advice. Below are some of the rewards of investing in real estate.
1. Added Cash Flow
People like the stream of cash they regularly receive when they invest in real estate. You can even mess up on a real estate deal and still make money. The cash flow you receive from real estate is passive. Therefore, you can invest in a rental property and receive a monthly income larger than your payment. For instance, if a tenant pays you $1,000 for his or her housing, and you pay the loan’s principal, interest, taxes, and insurance, you can still come out ahead. For each rental unit, you might pocket $150 to $200 per month.
2. Equity Capture
When you buy a property for under its value, this is called equity capture. For instance, if you purchase a property for $50,000 in a neighbourhood that features homes for twice that amount, you can reap a nice bundle of cash. If you fix up the place for $30,000, you’ve have just captured $20,000 in equity – all which adds to the property’s net worth. It’s difficult to see this type of return with other forms of investment.
3. Pay Down of the Principal
You naturally build equity in real estate by paying down the note. If you own rental properties, the tenants will help pay down your mortgage little by little. Whilst it may begin with about $50 per month, this amount adds up over time and increases the equity in your real estate.
4. Market Appreciation
On average, a real estate property doubles in value every two decades. Whilst it may fluctuate temporarily, it will rise to keep up with inflation, or the cost of labour, building materials, or the lack of land. Whilst people purchase stocks to gain appreciation in the marketplace, they often do not think of appreciation with respect to real estate. However, you will make money, and it will appreciate when you invest in this type of financial vehicle. You can ask a real estate agent about appreciation when you make investments. If you visit the Chestnut Park website, they may be able to provide you with more information.
5. Tax Advantages
A real estate investor reduces what he or she pays in tax in Canada by deducting two types of incurred costs on rental properties. These costs include capital expenses and operating expenses. The former offers a longer-term advantage, as the cost of furniture or equipment for a rental over a period of time, because the items continue to depreciate. This type of deduction is referred to as a capital cost allowance or CCA.
Also, you can deduct the interest for your mortgage, bank loan, or line of credit in Canada, including the property taxes when you invest. You will need to check with an accountant on what tax advantages apply, especially when you invest in Canadian real estate. Also, what you receive along these lines depends on whether you are a nonresident or resident.