6 Proven Ways Real Estate Builds Wealth
We work with partners who are not satisfied with the returns generated through traditional investments such as stocks/ bonds/mutual funds, and are looking for an alternative. Stock market returns are projected to grow roughly 7%/year over the next 10 years*. Although no investment vehicle is 100% guaranteed, our typical returns generated for partners is 12-25%/year, which usually increases the longer an investment property is held. (* source: The Globe & Mail)
1. Appreciation & Mortgage Pay down
As a property increases in value, wealth is built simply by the time associated with owning the property (assuming the mortgage and expenses are paid). This coupled with a mortgage that is being paid down by tenants allows you to increase your wealth, while decreasing your debt. Even if a property does not appreciate at all, if rent simply covers expenses, there is still a positive return on investment. Lets take a property purchased for $300K today, with 20% down payment, and a 3% mortgage. Lets also assume we rent this property out and only cover our expenses. Then with no appreciation, and only mortgage pay down, the property would yield a 12%/year return on the initial $60K invested. Now lets assume a modest 4% appreciation, in this scenario, the property would yield a total of 32% /year return on investment.
Given the historical appreciation of real estate in Canada (5%+ since 1956), it is one of the most secure investment vehicles available over the long term. Click here to learn how secure real estate investing is.
2. Cash Flow
We only purchase properties that are likely to cash flow well on the positive side. This means that each month we collect rent, after all expenses are paid, there are funds left over for us as the investors to decide what to do with. Given appreciation is a variable in real estate (although a very likely variable), we aim to at least equal, and in most cases beat the average stock market returns by only using Cash flow and Mortgage pay down. Learn more about Our Investment Model.
5. Tax Advantages
Tax Deferred or Tax Free through your RRSP’s or TFSA
6. Future Opportunities
Save your time
Our approach in working with partners takes all the guess work out of real estate investment. It is completely turn key, leaving all day-to-day management to us, and enjoyment of your return on investment to you.
Simple & Secure
Find out how simple it is to invest (in many cases, the funds are already available through the equity in your home). Also learn how secure real estate investment is compared to other investment vehicles.