6 Reasons Why Experts Consider Real Estate a Smart Investment

Do you have money piling up in the bank? Savings account interest rates are so low you’ll hardly notice them. Worse, you’re being penalized for putting your money in the bank because the inflation rate is higher than the interest rate of your savings account!

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So as you can see, having a large savings account is not always the smartest thing to do. Why not start an investment portfolio where your money can grow faster than it ever could in a savings account? Why not invest in real estate?

The exponential growth of the Canadian real estate market is proof that investing in properties is an excellent choice for anyone who wants their money to grow. Developers like Louie Santaguida are always building residential communities in Toronto to meet the demands from homebuyers and investors, not just in Canada but also from other parts of the world.

Here are a few reasons why real estate is a smart investment:

1. Positive cash flow.

You get a regular income stream through real estate investments, and oftentimes, your yield is higher than what you would make from stock dividends.

2. Hedge on inflation.

Real estate investments have shown the highest correlation to inflation relative to other assets such as corporate bonds and Treasury notes. When inflation occurs, the price of real estate will also rise.

3. Multiply asset value.

A benefit of investing in real estate, including commercial properties, is that you can place debt on your asset. That way you can acquire more assets without necessarily having to put up the cash to pay for them.

4. Capitalize on physical assets.

When you purchase rental properties, you are investing in something with meaningful value. The land where the property is built on has value, as does the building itself.

5. Tax Benefits.

Real estate owners get unlimited mortgage interest deductions that protect a portion of the cash flow generated and paid to investors.

6. Appreciation of asset value.

Over time, inflation will continue to increase, thereby reducing the value of the dollar. But with income-producing real estate,  the value of your asset also increases while the income derived from your property (from rentals) also goes up.

Finally, owning a beautiful piece of property is always a source of pride for anyone. When you have a property in a great location, you’re certain that it will make money for you, regardless of whether you rent it out or live in it and re-sell sometime in the future.

We’ve seen a lot of people make costly mistakes buying things like a sports car or a boat. They brag about it until eventually they realize how expensive it is to maintain their “investment” and when they try to sell it, they can’t even get back the amount they paid for it. But with real estate, the value of your property will continue to grow over the years.

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