DON'T WAIT TO BUY REAL ESTATE. BUY REAL ESTATE AND WAIT.
It takes a lot of patience, perseverance and good ol’ fashioned chutzpah to get started in Real Estate Investing. When done right, the financial returns through rental income, tax advantages and capital gains can be great. In many parts of Canada and in particular my own province of Ontario, Real Estate remains a stable investment offering higher returns than most GIC’s, RRSP’s and Stocks.
If I could turn back the clock and tell my 25 year old self that buying real estate would be a greater long term investment than buying red bottom shoes ( ladies.....you know exactly what I’m talking about ;) then I would most certainly have bought a duplex and lived in one side while renting out the other. Meanwhile, learning about home repairs, maintenance and how to be a landlord... all while my tenants pay down the mortgage and I begin to build equity in the property.
Buying the right investment property is key. A fixer upper, or foreclosed property purchased below market value can become a serious cash cow if you have the ability to do the repairs and renovations that the property will most likely need. Whether you decide to “fix & flip”, buying low and selling high for a quick financial payday or “buy & hold” for monthly cashflow, your real estate investment will provide a better return and lower risk than most other investing options. In general, your risk of loss goes down the longer you hold on to your Real Estate Investment. Your equity builds and your property value rises over time. That is unlike the stock market, where the risk typically stays the same.
There are other financial advantages that Real Estate Investing offers as well. Tax advantages. These potential tax deductions should not be overlooked when considering the purchase of an investment property.
Mortgage interest is a deductible expense however principal pay down is not.
Property taxes and utilities are typically deductible against the rental income.
Finance charges, which is one of the most overlooked deductions for real estate investors.
Repairs and maintenance costs are deductible expenses. Some of these may be considered a capitalized expense to which a qualified accountant will be able to determine.
Property management fees, commissions and advertising all qualify for tax deductions.
Insurance coverage for rental properties.
Interest on a Line of Credit is tax deductible.
Auto Milage and Home Office Expenses. There are many variables to legitimately claiming these as expenses. Speaking with a qualified accountant about what you can and cannot claim is advisable.
Last but not least, Capital Cost Allowance (CCA) is a yearly deduction in the Canadian income tax code that can be claimed on depreciable assets.
Once you take that initial plunge into Real Estate Investing you will then have opportunity to leverage your investment and build your portfolio into a number of income producing properties. As an example, imagine if you owned 8 properties and each tenant pays $1000 a month for rent. Eventually in time, the tenant pays off the mortgage for you leaving you with a mortgage free property that continues to generate cash flow. That's $1000 a month rent from 8 properties.... $8000 a month of passive income for as long as you own those properties! Not only has your investment property generated monthly cashflow but it has increased in value over time and generated capital appreciation too! What could be better than that?!
If you are thinking about investing in Real Estate for the first time or have already started an investment portfolio and are looking to expand, please reach out so we can discuss your needs.
Let me Help You Make the Right Move!
“Cause if you liked it, then you should have put a ring.....offer on it”