If you are considering diversifying your investment portfolio you must consider investing in real estate. It is one of the safest and more lucrative ways of protecting yourself in the long run. Real estate values have always gone up over the long term. Its numerous advantages differentiate it from other types of investments.
One of the reasons why buying an investment property is favored by seasoned investors is that financial institutions like banks and other investors consider investment properties as more stable than paper investments and stocks. A less volatile asset like real estate will offer better protection against depreciation, inflation and changes in your financial situation.
In this article we asked a Penticton real estate agent what they thought the top five benefits of buying an investment property would be.
Investing your money in real assets may be the wisest thing you can do to prepare yourself and your family for unforeseen financial challenges. It will also put you on the path to greater financial freedom in the future, something that almost all of us desire.
The Top Five Benefits Of Real Investment Properties:
You Are In Control
You will be the boss of your investment property so you will be making all of the decisions. From deciding which property to purchase to how to use the property and when to sell it, you will be the one calling the shots. The freedom to make your own choices, be in control of your money, choosing the way you can get the most out of your investment is something that some other investments lack.
Your Hedge against Inflation
Sufficient data is available to support the fact that your investment property will help you neutralize the effects of inflation. Whenever the cost of living increases, the value of real estate has always appreciated. This hedge against inflation protects real estate investors in more ways than one. First, owners of rental investment properties can demand higher rents, and even though the value of the property increases the mortgage payments will not increase if you have a fixed rate.
Your Investment Property Is Less Risky
Investment properties are considered less risky, especially if you hold onto the property for the long term. Real property investors should consider their investment as long-term investments because the longer you keep the property, the less risky it is. In comparison to investing in equities, which are subject to greater market fluctuations real estate is less volatile. History has proven it is unlikely that the value of your investment property will drop sharply in a short period.
Your Investment Property Creates Cash Flow
There are multiple ways you can earn money from your investment property other than selling it for the capital gain. If you rent out your investment property you are almost guaranteed a constant flow of income that will supplement your primary source. You can use this income to fund your lifestyle, make mortgage payments on your own house and more. This income can also cover the cost of having an investment property such as mortgage payments, operational costs, and tax payments.
Use Your Investment Property as Leverage to Grow Your Investments
After you have acquired your first investment property and have started reaping the benefits it creates the next logical step would be to use its value as equity for a down payment for future investment properties. You can channel a portion of the cash flow generated by the first property to buy another. With this technique, you will not have to cut back on your expenses to grow your portfolio.
Your Investment Property Can Be your Second Home
At a time of need your investment property can act as your home. It is common for property investors to move into their investment property after retirement or after holding the property for a long term and benefiting from the cash flow.