December 2012

Real estate, over the long haul, is one of the safest most lucrative investments to be made. This is how many of the wealthiest people have made their fortune. But it’s also a way the average Canadian can invest in order to better themselves financially.

Here are six ways you can profit from owning real estate investments.

Appreciation – Over the long haul, prices have and will continue to go up. Short term investing is trickier and you must know what you are doing.
Instant Equity – If you buy right, you can purchase your property below market value. Foreclosures, properties that have been on the market a long time, a house that needs a lot of work or some quirky thing that’s fixable, properties that are easily subdivided or rezoned or estate and divorce situations can sometimes be opportunities for the investor.
Depreciation – An investor can depreciate the value of the structure by 4% annually which will help save money on capital gains taxes when you sell your property. But always seek the advice of your accountant when it comes to taxes.
Cash Flow – Cash flow means that your monthly income from the investment is higher than your monthly expenses. Investing in other towns, provinces or even countries like the U.S. may be the most lucrative option right now, depending on the amount you want to invest and the type of property you want to purchase.
Leverage – With a 20% down payment, the bank will lend you 80% of the purchase price. This means you are controlling a huge asset with very little of your own money. The cash-on-cash return is a big reason why real estate is such a great investment.
Principal Reduction – Basically your tenants will be paying off your mortgage incrementally every month – another way, you are building equity in your investment property.

Put it all together and you have six ways an investment property can further your financial goals.