As a real estate team that’s thoroughly embedded in the local Essex County community, we’ve had a lot of experience helping our friends and neighbours buy homes. We’re often the first stop for people looking to find a house for sale, and love to scour the available market as well as private house sales to find the best home for our clients.
However, one area of expertise that we don’t get to talk about as much are income properties. When you’re buying a house that you know you’re going to rent out one day, the criteria can be a lot different than when you’re buying a forever home for your family.
Regardless of whether you’re looking for a single-family home to upgrade and rent out or a larger building with more tenants, we can help with your search. However, it’s important to understand the pros and cons before you jump in.
If you’re still on the fence, here are some of the best reasons why you should invest in real estate today.
1. Earn Passive and Predictable Income
One of the reasons why so many people are drawn to real estate investment is because of the income. Buying a house and renting it out is a great way to earn passive – and more importantly, predictable – income for the rest of your life. Many people can rent out their Windsor property for more than they pay on their mortgage, giving them positive cash flow that will increase over time, depending on the value of your unit.
Real estate also offers more predictable returns than the stock market, providing peace of mind for people looking to build their retirement portfolio.
Many investors are deterred from making real estate investments because they believe it will be a major drain on their time. However, with the right Windsor property management company, you can hire experts to do the management for you, leaving you to reap the rewards.
2. It Helps Diversify Your Portfolio
Financial planners stress the benefits of diversifying your portfolio. Your money should never be 100% invested in one type of asset, as a downturn in the market or collapse of a certain industry could lead to total financial ruin.
Most sensible financial advisors advocate for asset class diversification, where your money is spread out between stocks and mutual funds, RRSPs, and real estate. The larger your investment portfolio gets, the more real estate you should acquire. That way, if there’s a downturn in the market, you’ll be protected by the solid value of your real estate investment.
3. Tax-Deferred Growth
One of the great things about real estate is how it can grow in value without the owner having to pay taxes on this growth. Think about it. If you purchase a house for $500,000 in 2020, and by 2030 it’s worth $650,000, that’s $150,000 in equity that you own that you won’t have to pay taxes on until you sell the property.
This is referred to as tax-deferred growth, and there’s no limit on how much tax-deferred growth you’re entitled to claim.
4. You May Be Eligible for Tax Deductions
There are many tax deductions available for homeowners, as well as those who purchase real estate as an investment. You can deduct costs like your mortgage interest, insurance, depreciation, and operating costs, which can include the fees of a property manager if you choose to go that route. This a great way to cut down your tax burden.
5. Sweat Equity Yields Real Returns
Another reason why many people are wary of real estate investment is because they don’t understand the market, and worry about buying a property that will need an additional cash infusion to prepare it for tenants.
While putting money into your house will undoubtedly yield a good return on your investment, the truth is a lot of these tasks can be done easier and cheaper if you put a bit of ‘sweat equity’ into your new income property. You can easily cut down on costs like maintenance, painting, and even minor upgrades by doing them yourself.
6. Real Estate Always Appreciates
As a housing bubble bursts, many people anxiously sell off their real estate, worried that the prices will drop lower. However, year after year, history continues to show us that the market does recover from bubbles, and overall, real estate does tend to appreciate with time. The longer you keep your real estate investments in your portfolio, the more money you’ll make.
7. You Don’t Need to Do It Alone
Most people would never pick their own stocks or build their own financial portfolio without the help of an expert. The same goes for the management of your real estate investments. You can try and save money by doing it yourself, but you’ll get a much better return on your investment if you’re able to partner with an expert who already knows how to manage a property.
A great property management company has systematic processes for maintaining your unit and knows how to find great tenants fast. We asked Goldmar Property Management about their approach, and they said ultimately, “our goal is to facilitate better relationships between our landlords and our tenants.”
There’s no reason to struggle on your own when hiring a property manager can save you both time and money.
Want to Talk More About Real Estate Investments?
If you can afford the initial investment, real estate is a great way to build your wealth long-term. If you want to talk more about what Windsor real estate would make a good investment for your portfolio, just reach out to the Dan Gemus Real Estate Team.
As one of Windsor’s top real estate teams, we know a lot about the local market, and always love to talk to new prospective investors. Contact us today to get in touch with someone from our team, who can answer any questions you may have about investing in real estate locally.
