Interested in Real Estate Investing?
The Harbour Realty Group has deep roots in the investment world. As we're real estate investors ourselves, we have the hands on experience only gained from owning investment properties personally. With this experience we are also able to help new and experienced investors purchase quality investment properties in the Hamilton Area and to navigate the course of a sale or purchase smoothly. Don’t settle for an average agent, choose an experienced investment agent for you next sale or purchase.
6 Ways to Build Wealth in Real Estate
No matter what your circumstances are, whether you are a first time investor or a seasoned investor, purchasing investment real estate is always an exciting experience. It is also one of the best ways to build wealth over the long-haul, especially for the entrepreneurial-minded. When it comes to investing in real estate, education is key. Here are six reasons why you should consider investing in rental properties.
1. Mortgage Pay Down
When you buy a rental property using a mortgage, your tenant is actually the one paying the mortgage payment, thus increasing your net worth each month. Because of the loan pay down a rental property is essentially a savings account that grows automatically, without you depositing money each month.
Today you might owe $300,000 on a rental property, but next year you might only owe $290,000 because the tenant is making the payment for you, making you $10,000 richer. Once the term of your mortgage is paid down to $0, you now own a significant asset that you can sell or continue renting, all thanks to your tenant paying the mortgage.
2. Cash Flow
Many people invest in rental properties simply because of the cash flow which is the extra money that is left after all the bills have been paid. The cash flow can provide ongoing, monthly income that is mostly passive, allowing you to spend your time with family, traveling or reinvesting in more real estate.
Cash flow from real estate is stable and far more predictable than most other businesses. It's great news for times of market uncertainty as the cash flow can help float you though the bad times and live well during the good times.
While the loan is being paid down the value of real estate, generally, goes up. Yes, values do go up and down however, over time, values do climb higher and higher. That's why real estate is a fantastic long-term investment. Properties will continue to climb and in 30 years from now, the value will be worth far more than what was paid today.
Many real estate investors will tell you that “money is made on the purchase of the home”. While it can be hard to find discounted deals, having a savvy realtor will all you help find and negotiate the best possible prices up front and give you some instant equity.
Leverage is a powerful thing. If you had $100K and invested it in stocks, you would be able to purchase exactly $100K worth of stocks. But in real estate, the bank will match your money somewhere between 3 and 5 times for every dollar you put in. So, $100K won’t just buy you $100K worth of property, it could allow you to get as much as $500K worth of income generating properties.
Then, if appreciation occurs, it is calculated on the entire property value, not just the $100K you put in! So, a conservative 3% appreciation on a $500K worth of properties in one year = $15K in growth.
You’d have to have a 15% return on your $100K in stocks to accomplish the same gain.
When you decide to invest in an income property, you become your own boss. You choose what property to invest in, what tenant you will rent to, how much you will charge in rent and how you will manage and maintain the property as a whole.
In the average 9 to 5 job, you are subject to the wishes of your boss and the company infrastructure in general, such as adhering to a dress code. A stock or mutual fund is another example. Although you can choose what stock or mutual fund to invest in, you are still allowing someone else to manage and control your money.
The Harbour Realty Group can help you navigate through all the details involved in becoming your own boss. With years of on-the-ground experience and a vast network of contacts and professionals, you can consider us as your go-to resource.