For many people, real estate investing is a full-time job. It’s how people make their living, and some people are born to be real estate investors. For others, real estate investing might seem like something far too complicated to deal with. After all, buying a house for your family to live in can be stressful enough. Why put yourself through all that if you don’t have to?
The answer is that real estate investing can be a profitable experience that not only helps diversify your investment portfolio but helps build generational wealth within your family. In short, investing in real estate today could benefit your children in the future!
Let’s take a closer look…
Why Invest in Real Estate?
Real estate is often considered an extremely stable investment. It’s very low-risk, in that there is little chance that you will ever lose a significant amount of money in a real estate investment. For example, when you buy stocks, you are taking a lot of risks. The stock market is impacted by many factors that are well outside your control. At any point in time, a stock can skyrocket or plummet.
However, with real estate, you can almost always expect appreciation. Investing in real estate is not a scheme to get rich quickly, rather it’s a simmer that will eventually pay off years later. Take a look at our current real estate market – over the past decade we have seen phenomenal growth in appreciation over the short and long term. Most properties have doubled (or more) in value. Even if the market cools down to a more balanced level, you can expect that there will continue to be a reasonable appreciation in value. This makes real estate investing perfect for investors who are at the peak of their career with extra money to allocate somewhere that will offer a safe and reasonable ROI.
Real estate also helps you build equity, meaning you can borrow against it to grow your investment even more. It’s extremely difficult and rare to borrow against stocks, and in most cases, it’s something that is not recommended by financial experts.
If you’re an avid investor already, you’re probably aware of the benefits of a “diverse” portfolio. What does that mean exactly? Basically, it means not putting all your eggs in one basket. If you are deeply invested in one particular stock, and something happens to that stock, there goes all your money with it. If you have a diverse investment portfolio with numerous types of investments, you are protected from future disruptions or potential downfalls.
A Few Other Considerations For Investing in Real Estate
If the idea of investing in real estate sounds intriguing to you, there are a few things you need to consider first. Here are just a few examples of some of the major considerations when it comes to real estate investing:
- Are you financially viable to put down a down payment and pay a second mortgage?
- Do you plan to rent out your investment property?
- Will you hire a property manager?
- What are the monthly expenses you need to plan for?
- What kind of ROI are you looking to get?
- What are your short and long terms goals with this investment?
Investing in real estate is a bit bigger of a commitment than buying stock. The initial buy-in is more (the down payment), and you are on the hook for more responsibilities as a Landlord. However, if you cover all your bases, think things through, plan, and work with experienced professionals, you can certainly find success in this market.
What Kind of Real Estate to Invest In?
Most investors look for specific things in an investment property. Features like proximity to transit and schools, nearby amenities, and home features like stainless steel appliances, in-unit washer and dryer, and more are all common traits that renters look for.
Whether you’re buying a condo, a single family home, or a multi unit dwelling, it’s important to understand what work needs to be done to bring this home up to the current standards of today’s rental market.
Do your research and find out how much these properties are currently renting for, and what your monthly expenses vs. monthly income will be.
Looking for your ideal investment property? Search through our listings here.
Thinking about your next investment property? Here are a few blogs to help you choose the ideal location:
- 5 Up-and-Coming Toronto Neighbourhoods for Investing
- The Top 5 Family-Friendly Neighbourhoods in Oakville
- Our Top 7 GTA Pre-Construction Projects to Watch For
How Real Estate Investing Can Help Your Children
While many people choose to invest in real estate as a way to grow their income, diversify their investment portfolios, or help improve the affordability of their home (in the case of a basement apartment/second suite), there’s one often-overlooked reason to invest in real estate. Investing today can help your children in the future. Here are a few scenarios to consider:
- Purchase a condo today and rent it out, collect the rent in a savings account and then once your child is college age, use that money to pay for their school.
- Purchase a condo today and rent it out, once your child is college age, sell the condo and use the profits to pay for their school.
We have also seen parents buy condos or townhouses with the intention of eventually renting to their children or selling to their children when they are adults to help them get their foot in the door.
Passing along the Landlord responsibility to your grown children is also a great way to foster an entrepreneurial spirit and give your child experience with managing projects and making their own money.
Regardless of the route you take, investing today can have a huge impact on your life tomorrow. Whether it’s helping save money for retirement, helping to bolster your current financial situation, or preparing to best equip your kids for the future, real estate investing is almost always a great idea.