Why investing in real estate is a good idea?

 Here are a few of the many reasons that make investing in real estate a great idea.

The first reason is leverage, with a real estate investment you can gain more leverage than with another kind of investment, as you are using someone else money. For example with a mortgage, you are using for example 80% of the bank's money if you put 20 % down. You have the ability to make a small down payment which allows you to be able to leverage the rest of your capital. This further allows you to increase your overall return on your investment, remember that your actual investment is your small down payment. Your are using other's people's money for the majority of your investment, so there is no excuse to start earlier. Waiting to have a larger down payment does not make sense in this respect. 

Most of us are well aware that money invested in vehicles such as a TFSA or an RRSP  can grow, tax-free but many of us don't fully realize that buying rental property can also give you an investment that will grow tax free until it is time to sell at which time you will be paying only capital gains on the appreciation of your investment. Talking to your accountant you can find out if this applies to you and if this will fit with your personal financial plan.

Another thing to consider is that with real estate investments in the first year or two, there could be tax write-offs against your other income which you could use, if you are a high earner. You will need to check with your accountant if this applies to you.

Although cash flow is very important when investing in real estate and for many people this could be one of the main reasons why they are investing in a property in the first place, but
what is really crucial to your real estate investment is the appreciation of your asset over the long term and if we look at the real estate appreciation charts over the last 40 years, we can see that,  that type of appreciation is realistic.

Also remember that investing in rental real estate is a business,  many of the expenses are tax deductible and that you may hire people or a company to help you run the business, so you are not alone.

For many investors the most important reason to buy an investment property is because rental real estate is a type of forced retirement plan. Buying a rental property is a commitment that you will maintain which will build  your future cash flow and your future wealth.  Don't underestimate the value of the appreciation of your properties over time. With a real estate investment as there could be tax write-offs against your other income, you will need to check with your accountant, but this could be possible for some investors. . 

You won't get rich overnight but if you are young enough and have a large enough time horizon you will get rich in time adding to your real estate portfolio.

This is true for all kind of investments, it takes the commitment of long-term investing,  as well as a diverse portfolio to build true wealth and real estate investment is as an important part of that  equation.