Why Invest in Real Estate
Investing in real estate is a strategic move for those seeking additional income and wealth creation. With property values appreciating over time and through mortgage paydown, real estate offers a great way to diversify your investment portfolio, giving you additional confidence in achieving a secure future. For those struggling to save, a rental property becomes a form of forced savings and a pension plan, especially if don’t have a workplace plan in place.
Having renters help pay your mortgage is an excellent way for first-time buyers to break into the housing market. First-time buyers can explore buying a duplex or triplex and then rent out the other units to offset their mortgage costs.
Parents calculating the expenses of accommodations for post-secondary education often choose to become landlords. Knowing at least one tenant personally, they see the opportunity to offset housing costs with a sound investment.
Some additional reasons to consider a rental property:
- When markets are in a downturn, smart real estate investors buy properties for rent with a focus on long-term wealth creation.
- Property investing can be a good way to hedge against inflation, as historically property values and rental income have risen with inflation.
- Investing in rental properties allows individuals to build a legacy and create assets for future generations.
- Some investors purchase properties to use them personally in the future, such as for retirement or vacation purposes
Securing Financing
There are several options for financing your investment property venture.
- You can look at traditional mortgage financing, where a minimum 20% downpayment is required for non-owner-occupied properties. If you plan on living in one of the units, you can put down 5% on the first $500,000 and 10% on the remainder. Downpayments of less than 20% incur the additional cost of mortgage default insurance. If you put 20% down or more, you may be able to have a 30 or 35-year amortization to help with cash flow. With a conventional mortgage, you can expect a rate premium due to the perceived higher risk associated with investment properties. A rate premium also applies to longer amortizations.
- Partnering with others can help pool resources for a larger down payment and shared responsibilities.
- Utilizing the equity in an existing property through a Home Equity Line of Credit (HELOC) can provide funds for your investment property.
- Refinancing can be a powerful tool to leverage your equity for wealth creation. Equity build-up through mortgage payments or property appreciation can be accessed through a cash-out refinance. Rakhi Madan can guide you through this process, which will include breaking your current mortgage and qualifying for a new larger mortgage.
Seize Your Investment Opportunity
With the right approach and guidance, investing in real estate in Brampton and the GTA can be a lucrative long-term venture. Since you’ll want positive cash flow and long-term appreciation, working with an experienced mortgage specialist is important. It’s also important to work with an experienced real estate agent.
Rakhi Madan, your top Brampton Mortgage Broker, is here to assist you at every step, offering expertise in mortgages and connections with experienced real estate professionals. Explore the potential and secure your future today!
