The benefits of an income property
Updated: Mar 30, 2020
I love it when my clients share my passion for real estate. Lately, I’m finding that more and more of them are expressing interest in income properties and other real estate investment opportunities. They are looking to supplement their pensions and collect passive income, or they are considering buying a new property from paper for equity income. I’m a firm believer that, when done responsibly, investing in real estate can pave the way to financial independence and buying real estate is a smart choice – asset class diversification and wealth creation.
Assuming you don’t have the cash to pay for an income property outright – and few of us do – you may wonder how taking on an additional mortgage can possibly make good financial sense: There is good debt and bad debt. In simple terms, there are various ways to finance your investment. You can give your current home a job and help finance this investment, your mortgage payments will be covered or substantially covered by your tenant’s rent, and there are tax advantages and other opportunities. Over the years, the mortgage will be paid off, and you’ll own a property that has increased substantially in value and you are on your way to financial freedom.
One of the most significant differences between real estate investment and conventional investment in stocks and bonds, lies in the amount of money you need to begin.
To invest in $200,000 worth of stocks, you need to have $200,000 at your disposal. To purchase an investment condo for $200,000, you need only 25 per cent of that amount.
As with any investment, it’s important to be well-informed before you begin. I strongly recommend speaking with a real estate expert who understands the Ottawa real estate investment market, someone who can help you to evaluate your timing, as well as the location and type of rental property or other real estate investments that will serve you best.