5 Key Reasons to Invest in Real Estate Now

01 Feb 5 Key Reasons to Invest in Real Estate Now

If you’re looking for a lucrative way to invest your money, then the real estate industry would be your best bet. Find out more about it here.

5 Major Reasons You Need to Invest in Real Estate Now!

Real estate is a great investment.

You’ve probably heard this statement more than you could ever remember. This is because major players and novices alike can attest to the fact that if you want high and steady returns on investment, you’ve got to put your money where it matters the most.

With real estate, you can invest in an apartment or rental units for a monthly income, or flip a property for a bigger profit. And if you work with a team of real estate professionals, revenue is almost always guaranteed.

Why should you invest in real estate?

In 2017, Canada’s housing market told “a story of tremendous resilience,” according to a December 27, 2017 report in the Financial Post. This, despite experiencing its fair share of highs and lows, including new mortgage regulations and flooding during spring. Although it did affect sales and prices, the real estate sector remained steadfast, unlike what happened in the United States in 2008. Aside from that, there are more reasons to consider investing in real estate.

Better returns compared to the stock market

The risk is higher in the stock market because there are a lot of factors that can have a negative impact on your investment. This isn’t the case with the real estate sector. The longer you hold on to a property, the higher its value will be as you build equity. Additionally, you have more control over your returns because a house or apartment is a tangible asset that can be used as leverage for other revenue streams.

Higher value

If you want an investment that has a high tangible asset value, investing in real estate would be a wise choice. This is because there will always be value in a property, be it a parcel of land or an apartment complex. The value of stocks could dip to as low as zero, depending on market conditions and other factors.

Values will continue to increase over time

To prove this point, the Canadian Real Estate Association cited that the HPI (Home Price Index) increased by 9.3 percent in November of 2017, despite the downward trend of housing prices and sales. In 11 out of 13 regional markets that were monitored for the Price Index, the real estate industry was up by 14 percent in Greater Vancouver, 8.4 in Greater Toronto, and 5.6 in Greater Montreal. And though changes to the mortgage regulations and the rising interest rates could negatively affect the market, strong fundamentals still offer a positive outlook in the long run.

More attractive and more stable income return

Over the long term, your rental property could accrue a significant proportion of total return. As a result, volatility is reduced because investments that rely greatly on income return are less tense than those that depend more on capital value return.

Aside from that, real estate is more attractive than other sources of income because it usually trades at a yield premium. Besides, this asset class is a much better option, especially when Treasury rates are low.

More tax benefits

Aside from higher income returns, a real estate investment would mean tax deductions on mortgage interest, property taxes, operating costs and expenses, depreciation, and the like. This is why people in the real estate industry are extremely busy at the end of every year – everyone wants to take advantage of the tax deductions that could increase their profits.

More potential for diversification of portfolio

Because real estate investments have a low to zero correlation with other asset classes, adding a property investment in your portfolio could lower its volatility and risk while increasing your profit. This is especially helpful because by diversifying your portfolio, you are spreading out the risk, saving you lots of money in the long run.

Last but not least

To increase your wealth, you must be prepared to take certain kinds of risks. But if you want to minimize the risk, it’s a smart decision to invest in real estate.