Over the last ten years, the real estate industry has been very active, complete with TV shows focused on rental properties and apps dedicated to renting out these spaces in areas around the globe. In highlighting a market that had been around for decades, investment properties became a buzzword for new investors looking for secure assets. The interest grew with the expansion of online info that shared ways to make the most out of these spaces to maximize return on investment (ROI). Many appreciate the benefits of investing in property to bolster their portfolios, and that added income can then be reinvested further in more properties or however the owner sees fit.
Compared to buying stocks, this investment asset is unique for those who choose to venture into the industry. Let’s explore some of the advantages that draw investors in when it comes to this type of asset.
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A Source of Passive Income
One of the greatest conveniences of investment properties is their way of generating passive income. It’s essentially a nine-to-five “job” of sorts that doesn’t require a set work week but still yields a return. Whether you are planning to stash it away for retirement savings or keep it for a vacation fund, this revenue can enable for constant peace of mind as a secure and profitable investment, making it a worthwhile endeavour. Additionally, the income is largely tax-free because there are so many tax benefits available. As the homeowner, you’ll still need to be involved with ongoing maintenance, any complaints or concerns, and general upkeep. However, all of these tasks can be allocated to a property manager if you choose to have one, which would further minimize your involvement. Buying in a popular area, decorating to suit many different tastes, and marketing properly could mean your space is constantly booked, meaning that you’re effectively generating income even while you’re sleeping.
The Property Value Appreciation
Over the past several years, we have witnessed how intense the housing market can get. Although some home sale prices might discourage you when it comes to purchasing an investment property, ups and downs are common. The cooling-off period, like the one we are currently experiencing, is a perfect time to buy. You can also take the time to research up-and-coming areas or more remote places that are popular for summer vacationers. It is worth noting that real estate proves to be a sound area of investment, mainly because this market does not fluctuate daily but rather over a more extended period. With all kinds of options available for seasoned investors and first-timers, it’s relatively straightforward to enter the market and sit back as your purchase appreciates. Long-term value appreciation is considered one of the most significant benefits of buying an investment property compared to other non-tangible assets.
Plenty of Tax Benefits
In addition to the upfront costs, owning a property like this can feel like you are putting in a lot of money before making a net profit. The idea of spending significant funds can cause many potential buyers to shy away from even considering this kind of purchase. However, many write-offs are available for when it comes time to file taxes. Utilities, insurance, and repair and maintenance costs are just some deductions that are available to you if you own this type of property. The federal government actually has a regulated list of expenses you can deduct, so whether you choose to buy in your own city or another province, you can be assured that these tax breaks are available to you.
Diversify Your Investments
Mitigating the risks of your investments is a great way to ensure they continue to be lucrative. If you are wondering about the best way to build out your portfolio, many advisors suggest physical assets, such as real estate, as an area with minimal long-term risk that can have a high return. This is because the market stays mainly steady yet still sizable enough for a large return. It can always generate income and be useful for you regardless of the market conditions, even if you choose to sell. The money you generate from your property can also be put into other accounts and areas where you are interested in investing but may not have had the initial cash to use beforehand.
Ensuring Property Security
While some choose to purchase property as an investment, others may have it readily available and not know what to do with it. Perhaps you inherited a home from relatives that you can’t bear to sell. Or maybe you often work in another city and have decided to buy there as a place to stay while you are in town. You might worry that without someone in the residence constantly, something terrible could happen, like a maintenance emergency, inclement weather causing damage, or even squatters assuming the home is unoccupied. Using the property as an investment offers you the ultimate security when you are not there to look after it. You could also consider hiring a property management company to tend to the needs of the home while you are not there, especially if you live in a different area. Rest assured, it is constantly being cared for and will be kept in great shape for the next time you visit, or should you consider moving in once you retire.
Purchasing an asset like this can still come with hesitations despite being a sound choice for your portfolio. For example, you may have concerns with upkeep and maintenance or feel uncertain about your ability to rent out the space. The Chris Allard team believes that the benefits of investing in property can tip the scales of these worries. Before taking the leap into this kind of asset, however, you may want to consider consulting with a real estate agent to help find the best location for your investment and booking an appointment with our experienced mortgage brokers to help set you up for success. We are happy to answer any questions you may have and ensure you make an affordable investment that will pay off. Contact us today to get started.
Chris Allard’s experience in the field means he can get you offers with over 50 financial institutions lending in Ottawa. Every lender has many mortgage products they offer, which means Chris and his team will make sure a mortgage caters to your needs while also ensuring you get a competitive rate. Chris Allard is a proud mortgage broker of Smart Debt Mortgages, independently owned and operated. Smart Debt broker #12236.