Canadian real estate is more than owning a place to live. According to PriceWaterCooper (PWC), Canada’s population growth continues to increase, which has created a continued demand for homes. As the demand for housing grows, the prices continue to appreciate. Rental income is also another crucial part of real estate investment that has gone up over the years. Moreover, rental income is expected to increase following more immigration and more renters as opposed to homeowners. This is why the Canadian real estate market is an excellent investment. Read on to discover what makes the real estate market lucrative in Canada in comparison to other places.
#1. Property Value
Properties in Canada have seen a steady appreciation over the past couple of decades and this trend will most likely continue in the medium to long term. However, season-to-season real estate values may experience highs and lows like any other market. As such, you should understand when the prices are at a cyclical or seasonal peak and consider waiting for a pullback in prices. Real estate professionals can help you determine whether it is an excellent time to buy. A realtor may also advise you on when the prices will go higher or lower in your area. It’s usually advisable to get into new real estate investments when the prices have pulled back or are seasonally low, it order maximize your capital in the longer run.
Banks in Canada are more than willing to lend out money for real estate at low rates as long as you meet their requirements. Leverage is vital and a acceptable risk tool when investing in property. Leverage allows investors to use less of their own capital to pay for their property investments and build their equity. Gains, and also losses are both magnified, but as long are you are in the property game for the long term, and have fixed (but manageable) monthly mortgage financing payments, you can take advantage of the long term upward trend in prices. Cyclical or seasonal dips in the economy may also lead to lower interest rates that you can take advantage of by refinancing your existing, higher interest, property debt to reduce your monthly payments.
Although you can use leverage in any other type of investment, banks will lend smaller amounts at higher rates. The power of leverage with low interest rates makes the real estate market particularly lucrative in Canada.
#3. Low Entry Bar
Real estate in Canada is lucrative because you require little knowledge and research to enter. Almost everyone can figure out how to buy, sell, or rent out a property. Moreover, some firms specialize in the management of investment properties. If you are low on your finances, firms such as Altrua Financial provide mortgages and real estate advice. As such, you do not have to worry about how to go about the real estate business.
#4. Rental Income
You can earn at last $1000 of rental income per month for an apartment in most parts of Canadian real estate markets. Although you can find lower rates in many cities, you must consider some factors to ensure your rental is the best choice among tenants. For instance, tenants value a property in a good location and a reputable builder.
#5. Tax Benefits
Nothing discourages investment like taxes. Like most businesses, real estate has multiple tax advantages. As an investor, you can deduct mortgage interest. You can take out a loan to invest in Real Estate Investment Trust (REIT) and deduct that interest. You can defer income tax by claiming property depreciation. You can also write off any maintenance expenses and costs of running your property.
The success of investing in real estate depends on your skillset and the time you put into your business.