As most people know there’s many different ways to invest and make money. There’s the stock market, starting up your own business, investing in somebody else’s business, and there is purchasing assets such as properties.
In my opinion buying property is by far the best investment vehicle. Here’s a couple of reasons why:
First, I wanted to share a quick example of something that recently came up. A few days ago, my wife Brianne was telling me how frustrated she was with our savings account. We have a TFSA mutual fund account which is supposed to be pretty stable and good for short term savings. We use this account to save up for our annual whole life insurance premiums which we pay out at the end of the year. But in the last couple of weeks, we have lost $500! Would have been better to just keep the cash in our chequing account – or under the mattress!
It's no secret now that our preferred method of investing is to buy assets! One of the most interesting things about property is that you can invest hundreds of thousands of dollars and get the rewards of doing so without really paying for it. What I mean is when you purchase a property you can go the bank to get a mortgage, you’re not giving them all the money that the property is worth, you’re just giving them a fraction of it, 20% in Canada or less. For this 20% you get 100% of the value of the property. This is something you cannot get anywhere else. So for your 20% investment you get 100% of the equity growth. Imagine trying to do in a TFSA?
Now some people would say that you could possibly do this in the stock market with puts and calls but it’s much risker and not as stable as real estate. All you have to do with real estate if there’s an up or down in the market is wait to out. As long as the property is cash flowing through the rental income you can weather the storm.
There’s multiple ways that you make money with real estate as well. As you pay down the mortgage (correction, your tenants pay down the mortgage) you get more equity in the house which reduces your cost each month or you can also pull out that equity to purchase more properties. This is a key factor in how many investors retire from their 9 to 5 jobs.
You can also come up with other creative ways to create income in real estate. I recently spoke to an investor that actually sold the trees on his land for $20,000. The key thing to remember here is that property and land isn’t going anywhere. They’re not making any more land and in Canada builders can’t keep up with the housing demand either. Investing in real estate rental properties is critical to growing your wealth and will enable you to have a very comfortable retirement.
Contact us anytime if you are interested in learning more about how to get into real estate investing.