Investing: Why Real Estate?

Look at you over there, making moves and banking money! You’ve done exactly what you said you were going to do. You opened that business/got that promotion/landed that contract, and now you’ve got all this extra money, and a sneaking suspicion that a Chanel “investment piece”, while tempting, may not be the best investment move.

When we start seeing the financial rewards of the work we’re putting into our careers, searching for the proper vehicle to make that money work for us can sometimes seem like a whole new world of conflicting advice and measured risks.

Of course, there are the traditional tax preferred vehicles to consider. If you’re not maxing out your tax-sheltered accounts, do your research and see whether or not an RRSP or TFSA makes the most sense for you. (If you make a high income, an RRSP will probably be best.) But once you’ve run out of tax-sheltered contribution room, it’s time to start looking at other important areas of your investment portfolio.

I’m a real estate girl, through and through! I don’t by any means put all my eggs into one basket, but I do beieve that real estate should be a prominent part of any #PrettyGirl’s portfolio, and my reasons are simple.

1. Leverage

Being able to use the bank’s money, make a downpayment, leverage my capital, and increase my overall return on an investment is incredible.

2. Growth

Cash flow is key, of course, in purchasing a rental property, but appreciation in the long term can’t be discounted. Because of this, I tend to look at potential investments in terms of growth potential, not money spent now. I don’t want to buy cheap, I want to buy where there are things like job growth and economic development in the area, and where I know the long-term demand is likely to be good.

3. Tax Free Cash Flow

It’s not a huge secret – if you make use of depreciation and mortgage interest deductions (if you leverage your capital) cash flow should be tax-free, and I can wait for capital gains on the sale of the property in the future. A licensed accountant or financial advisor should be able to help you through the nitty gritty …

4. Tax Write-offs

This is all dependent on your professional classification, and I always advocate getting hold of a good, licensed, professional to help you through the ins and outs of any and everything to do with taxes, but chances are, you might be able to use your rental property for tax deductions against your other income. Talk to a tax professional BEFORE investing, so that you know what to realistically expect with your next venture.

We’re probably not getting rich overnight, but in the end, whether it’s a personal acquisition, a rental property, a stake in a publicly-traded REIT or the RELP market, it all goes back to the basics. Get a team of professionals on your side, look at who is involved, ask yourself if there’s a future. Long term investing and a diverse portfolio build true wealth. Real estate is an important part of the equation.

Happy investing!

“Long term investing and a diverse portfolio build true wealth.”


Leave a comment