Why invest in Real Estate?
Real estate offers investors an opportunity to create and protect their wealth like no other asset class. Period. You invest the downpayment, the tenants pay off the rest over time. You keep all the value.
Here is why. The seven main reasons why people want to own investment real estate: 1. LEVERAGE Real Estate is a “hard asset” which makes financing possible. second only to your home, multi-residential apartment buildings are the preferred asset class banks like to lend on. This means that you, the Investor, can benefit from the wealth multiplying effect of leverage, substantially compounding your return on investment (ROI) as compared to a non-leveraged investment such as stocks, bonds or mutual funds. 2. POSITIVE CASH FLOW – “Dividends” Real Estate can be a cash generating investment. After all expenses are paid, the investment provides strong stable cash flow that outpaces inflation. Who pays for this cashflow? For your home, you are the person that has to foot all the bills and pay for everything including that cash eating mortgage. In an investment, the tenants pay for everything. You reap all the positive cash flow which can be added to your personal earnings as supplemental retirement income. 3. MORTGAGE PRINCIPLE REDUCTION As the tenants pay rent, their payments not only cover expenses but pay the mortgage as well. This means that they contribute to your wealth by paying off the principle on the mortgage. Over the amortization of the mortgage, say 25 years, they will end up paying the entire mortgage leaving the owner/landlord with a property free and clear of a mortgage (debt free). 4. CAPITAL APPRECIATION By careful selection of the optimal investment property, in an area with strong socio/economic fundamentals, appreciation in the value of the investment can outpace inflation. Additionally, strategies that enhance value such as re-positioning, modernization and conversion along with experienced and proven property management and marketing can incrementally “force” the appreciation of a property. This is a unique feature of investing in real estate that other investment vehicles do not offer and, as in many cases, is generally the secret to the greatest profits. This is Active Appreciation. |
5. WEALTH EFFECT
Real Estate values have increased significantly over the last 25 years and have proven to be a powerful method of creating wealth over time. The wealth effects of leverage and mortgage debt reduction combined with property appreciation, results in accelerated increases in equity positively impacting your wealth. 6. HEDGE AGAINST INFLATION In times of inflation, when purchasing power is declining, individuals as well as investors seek ‘hard’ or ‘real’ assets to protect their wealth. Real Estate is one of the best vehicles to hedge against inflation, historically outperforming all other investments when adjusted for inflation. Other investments, such as gold, are also popular hedges against inflation, but none benefit from the wealth multiplier effects of leverage and income generation as real estate does. As an example, in the Greater Toronto Area, in the 30 years from 1986 to 2016, housing prices have increased 425%, whereas the average family income has only grown by 133%. Housing prices have increased at three times the rate of household income. 7. DIVERSIFICATION Diversification, either across asset classes or by income stream, reduces your investment risk. Real estate can offer you an investment diversified industries, as each tenant is employed by different industries. It can also offer diversity of income from geographical locations, quality of product and type of investment. |
Have a look at our video on investing in Multi-Family.
Partners
• Are you looking to reduce risk?
• Is diversification required? • Want to be part of something bigger? • Looking for better returns? |
Investment
• Mid size multi-family
• 10- 40 units • Markets with strong socio-economic profile • Value add opportunities |