Besides buying a house, there is more than one way to invest in real estate that can fit your lifestyle. As your parents will tell you, real estate investing has been a safe investment for generations. But for many people, investing in the real estate market is easier said than done. Despite house prices steadily increasing across the country, interest rates remain low and are appealing to investors. However, adding real estate investments to your portfolio does require a little know-how and we’re here to help.
Purchasing a primary residency
Where you plan to live can also be a long-term investment rather than a monthly expense with no benefits. Paying off your own mortgage and growing your wealth does have its own set of tax benefits. However, your principal residency is not a cash flow producing endeavor and can quickly become the opposite. But, if your property is in a desirable location and you make some solid renovations, your home’s value will increase. A hot real estate market has only made investments grow exponentially with little signs of slowing down.
House flipping and rental properties
If you’re a handy person, buying a fixer-upper, performing renovations and selling for a profit can be a viable investment. But buyer-beware, because that quick fix can quickly turn into a never-ending nightmare of expenses where you ultimately lose money. Do your homework before investing in any property by looking at rental costs and resell value in the area. Having rental income is a great way to pay off a mortgage and have cash flow. But make sure you do the math by factoring in expenses like repairs and property taxes.
Real Estate Investment Trusts (REITs) allow you to invest in a portfolio of real estate assets without purchasing property. As income is generated from properties in the portfolio, investors receive profits through dividends. The low barrier to entry and low risk has made REITs very attractive to many first-time investors. But like any investment there are risks of losing money if the properties become less valuable or interest rates rise. Talk to a trusted investment broker or our accounting professionals at Rise CPA to help you manage your investments.
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Rise CPA provides professional accounting, tax and business advice to help you make the right decisions at the right time. Since 1979, we’ve been helping clients create businesses and lifestyles they envision by delivering expert insights and financial guidance. At Rise, we excel at advising business owners and their families in a caring and personal way. Our services cover a wide range of Tax Planning, Auditing, Accounting, Estate Planning, and Business Advisory. Please call (604) 936-4377 or use the online contact form to book an appointment with one of our accounting professionals.