With mortgage rates sitting at an all time low, it is no surprise that so many people are opting to invest their money in the Real Estate market while receiving rapid and secure increases in their initial investment. However, purchasing an investment property can be quite different from when you purchased a house to call home. Like almost any investment, it is very important to look at the type of return that you are expecting as well as the level of risk that you are willing to assume.
Thus far, investing in Real Estate has been a safe long term investment with a historical increase in property values that are significantly above inflation rates. Real Estate investments allow for 3 great ways to see a return;
1. Increase in Property Values
Your investment should be long term with Real Estate, and as such – though it is possible for the real estate market to see some peaks and valleys, over time you are guaranteed to see an increase. The GTA has seen some amazing growth in value just over the past 5 years, with strong momentum continuing in the right direction.
2. Building Equity
The Rental market has been incredibly strong, with multiple offers on rental units in the GTA and strong. steady rental pricing growth. The beauty of this, is someone else pays down your mortgage while you reap the benefits of increased equity in the home. If you make an educated investment, you should not have to go out of pocket for the carrying costs of the home – except for regular upkeep and during vacancy periods.
3. Cash Flow from Rentals
To begin with, you may not always be fortunate enough to see a cash flow coming in from your Rental. Especially with new builds – most times you will find yourself breaking even. However, rental prices do increase over time and all things staying status quo (i.e. Mortgage rates, property taxes etc.) your mortgage should in fact decrease in this time and thus making a Cash Flow realization possible.
Real Estate is a fantastic investment and making the right decisions with that investment is of utmost importance. Doing your homework and having a Realtor who understands your CAP rate expectations and limitations will ensure that you are making the best decisions with your hard earned money.
If you are interested in learning more about investing in Real Estate or if you already have investments and require help securing tenants, I’d be happy to help! Contact me today…