Are you looking to diversify your holdings beyond stocks and bonds? If you want to pocket some real money, investing in property is the best thing you can do in Ontario. Real estate investment serves different purposes to different people. You may buy a home, renovate it, and resell it at a higher price. But if you want to generate a steady monthly paycheck, like a classic dividend-paying utility stock, renting is the best option.
According to experts, the investors in London, Ontario can reap maximum benefits by investing in a rental home. A rental property will be a good long-term investment, as well as a great way to earn real money every month. This means it is best to buy and long-term lease property to get consistent cash flow and long-term investment turnaround.
Some investors are hesitant to rent their property because of the hassles of finding and screening tenants, as well as leasing the building. However, today property management has become much easier in Ontario and can be done in a simple, efficient manner. And in return for some little efforts, homeowners can enjoy an excellent rate of returns, amazing tax advantages, stability, and inflation hedging.
Why Invest in Income Property?
If you’re wondering whether you should sell or rent out your house, you need to consider the benefits of the rental property. You may currently own property or chances are you’re thinking about purchasing one for investment. Whatever the case may be, renting is the most feasible option. Most of the wise investors buy a property and develop it with the intention of earning income on it. You may invest in residential properties, such as single family homes or multi-family properties, or commercial properties like shops or stores.
You may think that this is a large undertaking, but remember it is also immensely rewarding. So, to help you take the plunge, here we’ve compiled the 5 biggest reasons to consider investing in real estate to build your wealth.
- Benefits of High Appreciation
You may think that the real estate market is no more about making profits. This is definitely not true! There may be a slump in the market but it’s always safe to invest in real estate. Unlike other assets, the value of your property will undoubtedly appreciate over time. There may be temporary fluctuations in the real estate market, but it is always considered a safer, steadier market, especially in the long-run.
- Earn High ROI
Even if you’re using borrowed capital for investment, renting your property is going to be rewarding. This is because the rent that you receive from your tenants is sufficient to cover the marginal property expenses, as well as the interest payable on your loans. Since you’ll be using a small portion of your own money, it’s possible to get a better return on your investment in the long run. As compared to any other type of investment, income property is certainly a “high-performing asset” that will give you a higher ROI. In addition to this, real estate investment will also diversify your portfolio. This diversification of your portfolio will spread out the risk because real estate assets can lower portfolio volatility and provide a higher return.
- Inflation Hedging
For many investors, renting their property is the best way to hedge inflation. The real estate market is capable of dealing with rising inflation and as prices rise, so will the value of your asset. In this market, when inflation rises, some of the inflationary pressure is passed on to tenants and rest results in your capital appreciation. Just like inflation increases the price of all goods, you’ll also earn more money with a rise in the rent prices.
- Retirement Income
Rental income is real income and in the long run real estate investment will give you maximum gains in form of appreciation. Many people see this as their retirement plan because the rental property is considered passive income. With doing much, you’ll receive money and generate retirement income.
- Tax Benefits
Though rental income is taxable, you can benefit from many different kinds of tax deductions. Real estate gives you tax benefits by way of depreciation and the cost of repairs that are deductible. Landlords can also deduct insurance premiums on their rental property, operating expenses, and interest from the mortgage.