5 Reasons Why Real Estate is Still a Good Investment
03 Sep 2020
2020 has not been the year we were expecting, and for those people that were hoping to make some investments this year, the uncertainty of financial markets may have left them stuffing their money under their mattress.
This may be a scary time for home buyers, but there is one market you can still rely on to consistently be a good decision for your wallet and your future: real estate.
Here are our top 5 reasons why investing in real estate is still a good idea:
1. It’s a Safe Investment in Comparison to Others
We’ve just come out of some wildly high housing prices, especially in the Greater Toronto and Vancouver metropolitan areas. We are now starting to see prices stabilize, though there are still excellent gains to be made.
There tends to be a lot less volatility and uncertainty in real estate when compared to stocks and bonds. Also, as you pay down your mortgage, you also see your equity grow, whereas other investment opportunities leave you at the mercy of the market.
2. Property is a Tangible Asset
Tangible assets exist outside of an account balance, financial statement or exchange market, meaning they have a physical form and natural value. Real estate falls into this category, and it is an asset that you can leverage as capital as you pay down your mortgage.
Even if you don’t end up living in the home yourself, it’s a great investment to rent out.
3. It Will Almost Always Increase in Value Over Time
It’s easy to get caught up in the changes in housing prices from one year to the next, but the important thing is that over time, consistently, real estate proves to increase in value.
This means that investing in real estate is almost a guarantee of getting more out of it than what you put in, it is simply up to you take the following in to consideration when buying:
Are you buying at the right price?
Are you buying in an area that is seeing a lot of growth?
Are there improvements that you can make to the house or property to increase value?
If you are unsure of how to check these boxes off, our mortgage expert Joseph can help you navigate through options, deposits, rates and other financing options.
4. Real Estate Diversifies Your Portfolio
Give your investment portfolio some strength by adding tangible assets to your investments. This can be art, jewellery, antiques, or of course real estate.
A portfolio with a healthy mix of tangible and intangible assets is considered much more stable than a portfolio with only intangible assets, such as stocks and bonds.
5. It Comes With Tax Benefits
It’s hard to beat the tax benefits that come with real estate investing, which comes in many shapes and sizes. These benefits include:
Deductions such as property tax, property insurance, mortgage interest, property repairs, and property management fees.
Depreciation, another option if you own a property that is being used for business or income-producing purposes, such as a rental property, for a year or more.
Passive Income, any money that is earned from rental activity or business activity in which they don’t materially participate in, yet it explicitly excludes residual income earned from a passive investment such as dividends or interest from a mortgage note.
Capital Gains Taxes, which occur when you sell a property for more than you originally purchased it for. The profit can be taxed as short-term or long-term capital gains, which is typically a lower tax rate than ordinary income tax.
Invest in a Bradley Home
We’re able to provide full support online, over the phone, and in-person. Bradley is here to support you through the homebuying journey; we provide an array of support including virtual tours and contactless purchasing to in person tours and design appointments.