A few years back the Bare Naked Ladies wrote a song “If I had a $1,000,000.”
If you had a million dollars, what would you do with it? I could easily write a blog on this topic and discuss many ways we could use $1,000,000 to make our world a better place. I specifically want to address several reasons why I would invest $1 million in real estate over investing $1 million in the stock market.
Here’s why…
1. CASH FLOW – when you buy a property where the income pays for all the expenses and has some excess cash left over, that money goes directly into your pocket month after month. These properties may take some effort to find but they are well worth it. Never buy property that doesn’t cash flow.
2. CONTROL – you are in control of the real estate you purchase. When you give money to a financial advisor you lose all control and increase your risk by placing your money in the hands of someone else. When you lose control you increase risk, when you are in control you reduce risk.
3. APPRECIATION – location, location, location… matters with appreciation. It can be difficult to predict because market conditions can change when it comes to appreciation. The good news is this… since 1968, appreciation has averaged 6% per year across the board. Think of appreciation as “icing on the cake” for a great cash flowing property. It’s a nice bonus but never count on it!!
4. LEVERAGE – this is the best thing about real estate. Banks love to loan you money to purchase real estate because they think of it as a safe investment. Typically banks can loan you up to 80% of the purchase price of the property (95% for first time investors). Stock brokerages will lend you up to 50% of the purchase of stock but only under some very specific qualifications. Many people love to lend you money privately for real estate simply because they know the bank is comfortable to do this as well.
5. DEPRECIATION – tax deductions are given for real estate. This is simply an annual allowance for the wear and tear on a property. We don’t often see this advantage but our accountant does when he calculates your annual tax returns. Less tax means money in your pocket!
6. INSURANCE – real estate is one of the few investments that can be insured. If the companies that you invest your stocks or bonds have a bad year you are simply out of luck or have to wait for a period of time for the value to come back. That is very difficult to insure.
7. REFINANCE – as the value of real estate increases you have the ability to pull out cash (your downpayment) from the property and own the real estate with none of your own cash invested. How cool is that!!! This is a huge advantage. This is the most effective way to grow your portfolio and buy more income properties.
8. INFLATION HEDGE – real estate protects us from inflation. Because of the many ways we can generate income, real estate is one of the best ways to stay ahead of the rising costs of goods and services – inflation. Inflation in Canada is ~ 2.7%. Real estate, carefully managed, can easily generate double digit returns.
9. PHYSICAL ASSET – real estate is real – it’s something we can touch, feel and has a piece of dirt under it. The dirt under the building is almost always worth more than the building on it. Real estate is not something that’s just out there represented by a piece of paper we can’t see.
10. REAL ESTATE HELPS PEOPLE – I love this part – when we buy real estate we are providing safe comfortable warm homes for people who can’t afford a home on their own. Income properties managed properly are appreciated and cared for by tenants. It makes their life better. Who wouldn’t want to own an investment that helps people and provides income at the same time?!!! That’s the best!
A lot of people simply feel a real estate investment property is out of their reach financially. That simply is not true. The inability to buy real estate is simply a lack of education of how to do just that.
For over 10 years now, I have studied ways to help people purchase this awesome asset using methods they just weren’t aware of. It is doable for anyone willing to educate themselves.
Now, more than ever is the time to focus on creating passive income so that we don’t have to rely on job security in an unpredictable world!! Real Estate can be the perfect solution for this.
If this is something that you would like some help with, please feel free to reach out. We are always here to serve!!
Kind Regards,
John C. Heeney, CEO Glenroe Lending
Glenroe Farms Limited ( Private Lending )
We build LEGACY to create TRANQUILITY
john@glenroelending.ca
519 808 7370
