Despite what many people think, investing in real estate is exclusive to the rich. You don’t need huge amounts of savings to invest in property and it’s definitely something to consider for 2022. Property, in general, is a hot investment item at the moment. In fact, property company RWinvest cites the UK property market as being one of the most profitable investment ventures in 2022 due to skyrocketing tenant demand and steadily rising house price growth.
Passive income, tax breaks, and equity are only a few of the many benefits of investing in real estate. If you’re looking for a new passion project and a potential career in the New Year, real estate is a great option. The Canadian real estate industry is now worth $6.1 trillion, and it’s only going to continue growing with a CAGR of 10.02%.
It’s important to understand that there are always risks to investing in anything, especially real estate. You’re parting with large amounts of money, and this can be scary. But if done well, real estate investment can generate incredible revenue. Without risk, there isn’t a reward!
If you’re considering buying your first few properties in the new year, here are three reasons to invest in real estate.
Steady Passive Income
One of the most appealing benefits of real estate is the boost in monthly income. Whether you’re keen on investing in condos or you want to rent out large downtown properties, you can earn a steady stream of income through your investments.
Of course, investing in real estate requires an initial ‘loss’ as you buy your properties. But the potential for a significant ROI is huge once you get a steady stream of income from your tenants. The more properties you rent out, the large your stream of passive income becomes.
That’s why it’s so important to find reliable tenants who are able to pay the monthly rental fees. There is always a risk of tenants making late payments or not paying at all. Establishing a great system to run financial background checks on your tenants will reduce these risks.
As a real estate investor and a landlord, you are self-employed. You are running a business. That means you are able to write off some of your taxes.
Some of the most common write-offs include:
- Mortgage interest
- Real estate taxes
- Homeowner’s Insurance
If you’re not sure exactly what you can write off, hire a financial expert who can guide you through the process. You may already have an accountant or tax advisor helping you out with your finances. If so, ask them to run through everything with you. This is also something that condominium property management companies in Toronto, GTA, can help with.
Real estate is naturally appreciated. This means that the properties you invest in gradually gain value over time, as long as you maintain them. On average, real estate appreciates at a rate of 4% each year, so your assets increase without you having to do anything.
It’s important to note that not all renovations that you perform on your properties will increase their value. Before you make any drastic changes to your properties, do your research to see how they will affect the appreciation rate.