9 Reasons Why You Should Invest in Real Estate
There are several ways to prosper, to get rich or to make a fortune, but I know of no other investment vehicle that offers as many advantages as real estate.
Certainly, you could count on your RRSP investments, but with the returns of the past few years, the aging of the population and the retirement funds less and less garnished, let me doubt the validity of this strategy.
Another possible choice would be to redouble your enthusiasm and work more hours a week in order to raise your million. But let's be honest! How long have you been working and how much money have you managed to raise so far?
You could invest on the stock market, but you would be subject to yo-yo fluctuations in this kind of investment, and you will not be able to benefit from the leverage offered by real estate, with a few exceptions. But let's not delude ourselves, many have made a fortune on the stock market. I am not suggesting that there is no money to be made on the stock exchange.
You might discover a genius idea that will make you an instant millionaire or even hope to win the lottery! Good luck.
So this week I'll give you a list of various reasons why real estate should be part of your enrichment strategy over time. I know from experience that everything is not rosy and that real estate, like any company, has its disadvantages and disadvantages, I agree, be reassured!
1: All must stay
In the same way as feeding, clothing and sleep, housing is an essential need of the human who will always seek to have a roof, whatever it is. Consequently, the real estate market is an area that will always be in demand.
There are, of course, several aspects to consider in your analysis and decision-making, such as the economy, population aging, urban development, market trends and so on.
Keep in mind, however, that locating your buildings will always be a key factor in the success of your investments. A badly located building could cost you very much in the long run. Conversely, just like an ugly building could bring you back a lot if it is well located.
Here is a term often used in the field of investment: leverage. This one allows you to acquire assets with little, no view of your cash. All have already heard the expression ADA, the money of others. The principle is very simple and even more wonderful if you borrow 100% of the funds.
To illustrate this, let's take, for example, the purchase of a quadruplex that can be purchased with a 10% down payment if the loan is insured by a mortgage insurer such as CMHC, CMHC (CMHC) ).
You will succeed in acquiring an asset of the order of $ 500,000 with only $ 50,000 in cash. Do you know a lot of investments that allow this?
What if you bought the quadruplex in question without having to get money out of your pockets?
On social media, it is common to read that it is no longer possible to buy without cash. However, it is not because you have never done it that it is impossible to do so.
Using the maximum leverage effect makes real estate investment accessible to everyone.
3: Real estate has always gone through time
The greatest fortunes since the beginning of time have always included vast real estate portfolios. Real estate occupies and will always occupy a large place in the economy. That is one of the pillars.
Although markets and interest rates fluctuate, the housing market remains relatively stable. If you also want to pass through the market fluctuations and enrich yourself "passively" during the holding period of your assets, you will have to pay your buildings the right price, ie make the most profits to the Purchase in order to protect you from the possible decline in values.
Remember that it's all a matter of cycle and that everything that goes up, will come down one day to go up again. Be patient !
4: "Flips" will quickly replace your job
Now popular and mediatized, real estate flips have existed for a very long time. The principle of buying a good and reselling it for profit is at the very heart of trade. Applied to real estate, this will allow you to generate more cash quickly compared to the purchase of rental properties, and by the same, could allow you a faster transition to real estate.
Flips are the best way to live quickly from real estate. Revenues
generated are tangible faster than enrichment through the accumulation
of long-term buildings, but remember, big builders have always opted for
fast money enrichment. Patience has its virtues.
5: Three incredible combined returns
If flips are able to generate cash quickly, the long-term purchase of income-producing properties for its part generates recurring cash flows received monthly. This is a first return on your invested cash, if any.
In addition, you will receive a second return when your tenants repay the mortgage related to the property. The portion of capital reimbursed will be increasing and the enrichment will be exponential over time. This is the same principle as compound interest that increases over time in investments. As one often hears the popular expression: "Time makes its effect in real estate. "
Finally, you will realize a third return due to the fact that your property will gain value over time. Are buildings currently worth more than 25 years, 50 years, 100 years? Ask the question was answered.
In summary, it will take more time with rental real estate to generate cash in your bank account but be patient. You gain from these three returns: cash surplus, the capitalization of loans and the capital gains of your buildings. Just like your net worth, the cash flow will grow over time and may allow you one day to achieve financial independence. Who knows ?
6: Will your pension funds be sufficient?
Many people prepare their retirement blindly or worse, do not plan it and rely solely on the government hoping to benefit from a golden retirement. Only relying on your employer to insure your old days is often insufficient. Real estate investment can allow you to fully enjoy life without having to deprive yourself, all things being relative. Real estate investment offers the advantage of being able to enrich you, even on a part-time basis.
7: Group investment
Take advantage of what you are the best! Here is one of the wonderful benefits of real estate partnership. Whether you have money to inject, talents as a negotiator, whether you are good at research, construction or other, partnership is an avenue used by many to take their first steps, to make better deals and / or To increase their yields.
However, the expectations, obligations and responsibilities of all must be clearly defined in a shareholder agreement or other legal partnership agreement. Do your homework before you join, because not all partnerships work well! Some people may end up in an unfortunate situation caused by the excitement of a hasty project. Take the time to choose your associates.
8: Because real estate is exciting
Ironically, I often meet people who are passionate about real estate but have never done so. In my opinion, they are passionate about the dream that real estate can represent.
On the other hand, most of the people I meet are real enthusiasts. As much as they can enjoy visiting buildings, meeting sellers, negotiating, solving problems of tenants, finding themselves in privileged situations that bring them extraordinary transactions, creating a freedom, being their own boss, and so on. So many reasons that people are passionate about investing in real estate. What are yours?
9: Control over investment
Real estate is tangible! You own a property, an asset and have decision-making power over several key factors. I am thinking, among other things, of the price you will be paying for the building, the area you will buy, the person who will manage the building, the type of clientele that will be entering your buildings, the price of the rents, Inclusions and exclusions from the agreement, to name just a few. Control over your investments is important and real estate offers this undeniable advantage.
I know that some will argue that there is the Régie du Logement which is holding back rent increases. But keep in mind that these are only suggestions and not obligations. If you develop your negotiating skills and buy high potential buildings from rent increases, you will work miracles!