05 Feb 5 Financial Advantages of Investing In Real Estate
Does thinking about the world of financial investment make your head spin? With so many ways to make your dollars go further in today’s world, it can be tricky to decide where to channel your focus. From the stock market to investment funds, mutual bonds and real estate, the options at your disposal can seem almost limitless. At Capital Mortgages, we are (of course) biased towards suggesting an investment in real estate – but with good reason. Read on to learn why.
As your local economy grows, so does the demand for real estate. This demand inevitably drives rental prices higher, allowing you to collect more money on your investment property each month. In this sense, real estate transfers the pressure of inflation onto the tenant, allowing you to reap all of the financial rewards. This also means that your property will have appreciated in value over time if ever you decide to sell it.
Your cash flow is the amount that is left over after you collect the rent on your investment property each month and pay off your mortgage, insurance, taxes and any other associated upkeep costs. Anything left after that is considered profit!
We’ve all been there – you’ve earned $60,000 at your full-time job, only to take home a percentage of that after employment tax. However, the government tends to reward property owners by allowing them to expense the interest paid!
Most people who are buying an investment property for the first time will likely be borrowing money in order to do so. While you will be required to pay that money back with interest, those payments will also be bringing you closer in the direction of reducing your property’s principal payments. From this perspective, you’ll be building equity and wealth in your investment property simultaneously.
The advantage of retirement income may not be the first benefit on a young professional’s mind, but it is an important one to consider. If your investment property mortgage is paid off by the time you enter retirement, you will be able to enjoy considerable additional cash flow to support your non-working years. Of course, this can also be an advantage well before retirement if your situation allows!
Planning to invest in your first rental property and grow your financial portfolio? Give the team at Capital Mortgages a call today so we can help you with the first step – getting pre-approved for a mortgage!