The benefits of an income property

I love it when my clients share my passion for real estate. Lately, I’m finding that more of them are expressing an interest in income properties and other real estate investment opportunities. They are looking to supplement their pensions and collect passive income, or they are considering buying a new property from paper for equity income. I’m a firm believer that, when done responsibly, investing in real estate can pave the way to financial independence. Buying real estate is a smart choice — asset class diversification and wealth creation.

I can’t lie. I get pretty excited when I’m approached about this topic. Having worked in the Ottawa region for more than 35 years, I’ve seen it blossom into one of the country’s most promising areas for this type of investment, and as a millionaire real estate investor, I know how important it is to have a diversified portfolio. It is a fixed asset, you can leverage it, you can buy with other people’s money, or you can rent it, flip it, re-finance it or sell it for a profit.

Assuming you don’t have the cash to pay for an income property outright – and few of us do – you may wonder how taking on an additional mortgage can possibly make good financial sense. Well, there is good debt and bad debt. In simple terms, there are various ways to finance your investment. You can give your current home a job and help finance this investment.

Your mortgage payments will be covered or substantially covered by your tenant’s rent, and there are tax advantages and other opportunities. Over the years, the mortgage will be paid off, and you’ll own a property that has increased substantially in value and you are on your way to financial freedom.

One of the most significant differences between real estate investment and conventional investment in stocks and bonds, lies in the amount of money you need to begin. To invest in $200,000 worth of stocks, you need to have $200,000 at your disposal. To purchase an investment condo for $200,000, you need only 25 per cent of that amount.

As with any investment, it’s important to be well-informed before you begin. I strongly recommend speaking with a real estate expert who understands the real estate investment market you're interested in, someone who can help you to evaluate your timing, as well as the location and type of rental property or other real estate investments that will serve you best.

To receive a FREE copy of a new special report titled “Homebuyers: How to Save Thousands of Dollars When You Buy,” email sales@bennettpros.com

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