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Tipping The Scale In Your Favour
When you choose investment real estate as part of your portfolio
you are tipping the scale of successful investing in your favour.
Here’s how:
Diversification
Market Timing
Leveragability
Tax Advantages
Cash Flow
Free Title Ownership
Wealth Creation
Inflation Hedge
Benefits of Income Real Estate
Diversification
Asset Class Diversification
Reducing the overall risk level of your investment portfolio is
something you strive for and having real estate investments form
a part of the solution is a decision with far-reaching benefits.
Asset class diversification is a key component of risk reduction
because it ensures that at least a portion of your investment portfolio
is performing well. Adding investment real estate to the range of
asset classes you invest in will help offset the volatility of other
assets, such as stocks. This reduces the overall risk level of your
portfolio, providing steadier returns with reduced volatility.
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Economic Cycle & Regional Diversification
A key part of our due diligence process involves analyzing where
a region falls within the typical economic cycle. When you own
multiple properties located in multiple regions you are able to
maximize your exposure to various economic cycles and more effective
capitalize on the benefits of market timing when you decide to
sell a property.
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You can also diversify the ongoing performance of your real estate
investments by choosing regions affected differently by varying economic
conditions. This is why, over time, a real estate portfolio spread
out over various regions is preferred to one centered in a single
region.
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Market Timing
Effective market timing, or “buying low and selling high”, is a crucial component of successful real estate investing. While it is difficult to time when a market has reached the bottom of the real estate cycle, noting an upward trend and jumping in, even if it means paying slightly more, can translate into strong future returns.
Real Estate Cycle
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The real estate market is not an exact science. A myriad of factors, including seller motivation, supply and demand, interest rates, employment trends and population growth can affect pricing significantly. A solid understanding of the real estate cycle, substantial market area research and the fortitude to get into the market can be hard for the individual, but when you work with 20|20 Realty, you are backed by a team of industry experts with your investing successful always in mind.
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Leveragability
Leveraging Your Investment Capital
When you use borrowed capital to enhance the earning potential
of an investment you are using the full benefit of leverage. When
you invest in real estate you are choosing a tangible or hard asset,
which makes financing more readily available to you. You are then
substantially increasing the potential return on your leveraged
real estate investment compared to a non-leveraged investment.
Leveraging Your Mortgage Financing
You are further benefiting from leverage when the rental income
generated from your investment property is used to pay down your
mortgage financing. The rental income earned by your property will
typically be sufficient to offset your mortgage payments and all
associated expenses for your unit.
Leveraging Your Time
When you choose to participate in the optional property management
solutions offered by Signature Service you are choosing to leverage
your time to your best advantage. You simply make the decision
to purchase an investment property and allow the professionals
to do what they do best. You then benefit from owing a high quality
investment, while not having to deal with the day-to-day tasks
associated with managing the property.
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Tax Advantages*
Tax Deferred Growth
Similar to an RRSP, the property value appreciation your investment
experiences is sheltered from tax until you sell the property.
For instance, if you purchase an $80,000 property that increases
in value to $120,000, this gain of $40,000 is sheltered from tax
until you sell. When you own multiple properties this benefit compounds
since there is no limit to how much growth you can shelter with
real estate investments.
Tax Breaks
When you do sell your property and thereby trigger a capital gain
you will benefit from the capital gains status of this profit.
This means that 75 percent of your capital gain is taxed at your
marginal tax rate, while 25 percent of the gain is tax free! This
25 percent tax free profit can quickly add up when you own multiple
properties.
Tax Deductions
Investment real estate allows for many tax deductions. The cost
of financing and operating your property can be deducted from the
income you earn. For instance, mortgage interest, property taxes,
property management fees (if applicable), repairs and maintenance
and other related expenses can be deducted from your gross rental
income, thus minimizing the amount of tax you will pay.
* The specific tax benefits you will enjoy may differ from other
investors, so be sure to consult your tax accountant for specific
advice.
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Cash Flow
A fundamental benefit of real estate investing is its potential
to generate income, especially over the long-term as your mortgage
is paid down. The income generated from your investment property
will often be sufficient to offset your mortgage payment, taxes,
condominium fees and other expenses, while still providing you with
positive cash flow.
Your cash flow will be strengthened over time as you pay down your
mortgage. These funds can then be used to supplement your retirement
income.
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Free Title Ownership
Your investment real estate purchase through 20|20 Realty gives
you free title ownership and control over your property. You benefit
from the security of free title ownership of a tangible asset, just
like your own home. With this control comes the ability to sell,
refinance or hold on to the property as you see fit.
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Wealth Creation
The equation is quite simple:
Mortgage Financing Reduction + Property Value Appreciation = Long
Term Wealth Creation
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Over time, strategically selected real estate investments can be
powerful vehicles for wealth creation. It is that simple. The value
of your investment property increases, while the corresponding mortgage
financing is reduced nominally through regular mortgage payments.
The result is increased equity and increased wealth.
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Inflation Hedge
A long-term real estate investing strategy will effectively hedge
against inflation by providing you with an asset whose value has
historically increased at a rate similar to the rate of inflation.
You are thereby ensuring that your “real” or “hard” asset
will help maintain your wealth and corresponding standard of living.
Contact us today to learn how we can create a customized road map
that will have you enjoying these benefits of
investment real estate.
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Benefits Of Income Real Estate
Creating Income Sources For You
Statistics Canada reports that a mere five percent of Canadians
will retire comfortably or wealthy – which segment of retirees
will you fall into? When you choose investment real estate as an
important component of your balanced portfolio and retirement plan,
you are recognizing that real estate investing done right can provide
you with a secure, long-term source of income.
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Renewable Source of Capital
Investment real estate is a renewable source of capital,
through re-financing options as property values increase and mortgage
financing decreases over time, and can effectively offset the
potential diminishing capabilities of your RRSP.
Tax Deferral
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You can defer taxes owing on the value appreciation of your investment property until you sell, meaning your investment value can grow tax-free year after year, and giving you the benefit of tax-free compound growth. |
Tax Free Gain
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You also benefit from the “Capital Gain” status of property value appreciation, which means in Canada, according to the CRA legislation, you will be taxed on just 50% of the gain and 50% of your gain is tax free! For further clarification of this, please advise with your accountant. |
There are even more tax advantages to owning Canadian investment real estate
and these can be discussed when you meet with one of our Real
Estate Advisors, and start planning how you will secure a place among the
five percent of Canadians who can look forward to a financially secure
retirement.
“ Every month, each of my ten properties located from Ontario to
British Columbia, transfers cash into my bank account. Across
the past few years I have trusted 20|20 Properties to provide an investment
that has consistently weathered Canadian markets better than other
financial vehicles.”
Chesley C.
Equity Club Member
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