To most people, buying a property is one of essential milestones in their lives. Right along, having a family and building a great career. Some buy properties as investment vehicles and others buy to better their lifestyle. However there other benefits that most consumers don’t ever consider.
Residential property investing has proven to be more beneficial and profitable then investing into the stock market or other forms of savings. Canadian housing market has been exceptionally strong over the last 3 years and faired very well through the ongoing recession which started in late 2008. In Toronto alone, house prices have steadily risen by up to 5% year over year. In most cases it has been even more. Sales of condominiums have never been higher and new buildings are transforming the city’s skyline. Old, inoperable properties are giving way to state of the art living complexes.
By purchasing a property you give yourself an opportunity to increase your life savings with each mortgage payment you make. By doubling up your payments every few months, you can put yourself in a much more favorable position. The amount of equity in your home will increase exponentially excluding any value gains your house is bound to experience during that time.
Owning a house or condominium can also give you the leverage to buy an additional property fairly soon as well. A second property can be a great source of rental income. By focusing your financial resources on decreasing your mortgage, you can be on your way to buying a second home fairly soon.
By surrounding yourself with experienced, knowledgeable professionals you take the guess work out of choosing the right investment property increasing your own chances of maximizing the property value. A good real estate agent can show you what areas of the city tend to appreciate most in real estate value and future social trends there. And on the other hand an experienced mortgage broker can find an affordable mortgage for you at the term and rate that suits your budget needs.
A good, low rate home equity line can be used to pay for your children’s university years too. Unlike most popular believes, continuing to pay off your house is more beneficial then opening up an RESPs during the younger years of your children. The reason for that is three fold. By continuing to invest in your property, you are likely to build up lots of equity sooner which can later be used to finance your children’s university years. Secondly the return on your own property is likely to be greater year over year then any mutual fund or other holdings that you are likely to own in RESPs. Thirdly, by their very nature RESPs are inflexible. Should any emergencies happen, taking equity out of your home without incurring penalties is far easier then breaking an RESP.
A peace of mind is often an over looked benefit as well. Stocks, mutual funds and other investment vehicles are tied to the stock market. Unlike real estate value gains, which are steady, stocks and derivatives returns are volatile and their future value is hard to predict. Because of their inherent risks, returns on them are not guaranteed and tend to fluctuate wildly. The time spent on valuating rates of return can be used else where.
And finally, whenever you are investing into a property, you not only invest in yourself and your family. Your assessed property taxes are used to improve local schools, community centres, municipal roads and libraries.