Why Income Properties Are a Great Investment
With more and more people looking at different ways to invest their money, let’s take a look at the option of buying an income property. If chosen correctly, income properties can provide amazing returns and allow you to grow your savings. Although the up-front costs may seem large, the pay out in the end can be well worth it. Whether you are looking to set yourself up for retirement or to grow your money to upgrade your own home down the road, real estate is almost always a great investment, especially in a stable market like Ottawa.
Let Someone Else Pay the Mortgage
As long as the property is rented, an income property should not be too large of a monthly expense. In theory, the rent paid by the tenants should be pretty close to the amount you will be paying on your mortgage for the property. With each passing month, the equity you have in the home will grow. Whether you need to sell and access that equity, or you choose to hold into it until after the mortgage is paid off, this makes real estate a relatively safe investment. And remember, once the mortgage is paid off, the rent payments become income.
A Great “Long Term” Investment
Investing in an income property is a great longer term investment and not a method to “get rich quick”. There are a few reasons for this which include the closing costs on buying or selling a home. If you sell too quickly, the profits may be eaten up by other costs. Ideally you want to keep the home for a longer term to optimize your profits but this doesn’t mean that you need to wait until the mortgage to be paid off to sell; just make sure you plan to own it for a few years.
Ottawa is a Stable and Growing Market
Real estate is a relatively safe investment and in a stable market like Ottawa, the home values increase gradually over time. We don’t tend to see the same inflated prices as other Canadian markets which makes a drop in home values highly unlikely, especially in the long term. As long as your home is maintained and nothing catastrophic happens, it should appreciate in value over time.
Invest in your Retirement
With pensions disappearing, many people choose to invest in real estate as retirement savings. If the mortgage on the home is paid off by the time you retire, the property will offer you monthly income. The other option is to sell and take the value to live off of in retirement. Whichever you choose, it is a great way to plan for your future.
Finding the Right Property
Buying an investment property is much like buying any other property except that you will want to pay close attention on a few slightly different details. When you are buying a home to live in, you consider your needs and wants but when you are buying an income property you will want to consider the needs and wants of the neighbourhood (is there a need for a rental property and will this property interest potential renters?) and also you will want to look at the likelihood of the property appreciating in value over time. Although this may seem like a lot, working with a Realtor is a great way to ensure that you invest in the right property!