Purchasing developed real estate is a proven way to get a return on our money. There are two ways to achieve this. We could purchase a house, and rent it out long term to pay for the mortgage. Or we could buy one under the average price of a comparable property, improve the least desirable aspects, and ‘flip it on’ to someone else for a profit. The final choice depends on you, the investor.
Making Money Work, Not Working for Money
The majority of Calgary residents work their whole life long in return for a salary, and hopefully a pension. They may purchase and pay for a home while employed, and hope their pension will stand them in good stead. Unfortunately, the value of a pension gradually degrades, because the annual increases don’t quite keep up with the cost of living.
Clearly, we should plan to accumulate more wealth than we gain through employment after we have settled our monthly bills. Investing in real estate is a popular choice since it is the store of real value. There are two ways to go about this. depending on your personal plan and the desired outcome.
# You could have an active policy of purchasing ‘fixer uppers’, improving them, and flipping them on
# You could make a passive investment in a second property, rent it out and see the value grow over time.
The Pros and Cons of Investing for Capital Gain
Some investors have made good gains and grown their portfolios by following professional advice. Others have not, because they failed to understand the local real estate market. A falling market can wipe out capital gains they invested in a flipper house. When the foreclosure signs start going up it is time for an urgent review.
Advantages of a Solid, Longer-Term Investment
Cash flow investors keep their second properties for longer, and rent them out to recover more than the associated costs. Rental income is virtually guaranteed money in your hand. Moreover a fall in the market can never take away the income you earned.
Finally, long-term rental cash flow cushions you from fluctuations in market values. Line up what you could earn versus how much you might pay. If the income you get is more than your regular mortgage payments and provision for maintenance, then you could be surprised how quickly you whittle away at the debt.
Would you like to explore this option in more detail? Would you like discover how to make decent money by investing in solid property? If so, please contact Stonegate Equity Ltd. or call (403) 829-1661 for more information. Our advice and experience are free to you.