5 reasons investing in real estate is right for you
So, you have some savings that you’re looking to invest. Real estate is on your list of potential investments, but it’s a daunting market to enter, and you can’t help but wonder if it’s a good fit.
Here are 5 reasons investing in real estate is right for you:
Do you have at least $25,000-$50,000 in capital to invest? Then you’re a prime candidate for joint ventures and real estate investing. You have the money to either fund your own project or enter a joint venture agreement as a partner.
Have a hard time even reading your reports for your RRSPs and TFSAs? Wonder what all those fees are doing for your bottoms line? Do you want to see your money work for you? Joint venture real estate can be structured to fit your needs. Want to be able to understand your risk and have more than one exit strategy? Need to make good returns on your investment? You can negotiate an interest earning on your investment, and the interest you earn will typically be higher than any RRSP or TFSA. If you’re looking for even better returns with a little more risk, sometimes profit sharing is an option. Talk to your real estate investor to see what kind of options they offer.
You’re looking for an investment that you can reap the rewards of within six months to a year. Real estate and joint ventures can be short-term using a buy-fix-sell formula, meaning you’ll see the returns on your money a lot faster than most other investments. Because real estate is a fairly stable market, there’s a lot less risk in going short-term as opposed to most Mutual Funds that require time, market correction, and growth (more on that in another post). Want some passive income and long-term investment? Not a problem. Look at a buy-fix-hold strategy. The beauty of real estate is there is always the right investment for you.
You’d like an investment backed with something tangible, not just a piece of paper that could be worth nothing tomorrow (think Enron). Because of the stability of real estate, it makes a great alternative to stocks. It doesn’t fluctuate day-to-day, rather its rises and falls are slow and steady, making for a more stable investment. And the cherry on top is that, if it’s done right, the value is built into the deal before you even start a renovation. When a real estate investor buys a property, they should aim to buy it under the dollar—say $0.60 on the dollar, so a $100,000 house is purchased for $60,000. That’s $40,000 of value that is built in, that was created just by negotiating a good deal. If you had to turn around and sell the property tomorrow before renovations were started or finished, you’d likely still come out ahead, and you have room to take a hit on sale-price before losing money.
You’ve always seen the benefit of investing in real estate; the problem is, you don’t have the knowledge, skills, contacts, or time to do the deals yourself. Maybe that’s what is holding you back, but in reality, that’s not a problem. You’re the perfect candidate to team up with someone in a joint venture. Joint ventures with a working partner allow you to enter the real estate market with one part of the equation (money/equity/capital) as opposed to doing everything yourself.
Do these five reasons fit you? Do you want to enter the world of real estate investing? The best place to start is with some education and information. Start talking to others about your plans and look for some books at your local store or Amazon. Knowledge and information are always the best first step for starting any new venture.
