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There are distinct advantages to investing in real estate over conventional investments such as stocks, bonds, etc. Here are just four.
The power of leverage can dramatically boost the returns of your investment. $50 000 invested directly into the stock market allows you to control $50 000 of stock. $50 000 invested into a property at 20% down allows you to control $200 000 of real estate.
$50k of stock at ROI of 10% results in $5000 of interest.
$50k down on RE, leveraged at 20% with an ROI of 10% results in $25 000 interest.
Mortgage Pay Down
The interest on the mortgage is covered by the rent paid by tenants who are hand-picked by 2nd Story Real Estate Investments and must go through a stringent application process. At the end of the investment term, you not only reap the rewards of a property that has increased in value, you also gain the equity in the property as a result of the mortgage being paid down over the period of the investment.
Any interest that is made on a conventional investment is taxed by CRA as income. Income is taxed at the highest level. Investment real estate grows tax-free until the property is sold. At that point, the appreciation of the property is taxed as capital gains rather than income. Capital gains are taxed at a much lower rate. In addition to this, any interest paid on the mortgage on property as well as other expenses are tax deductible.
This is another feature that is unique to a real estate investment. While some other investments may pay out a dividend, real estate can provide you with regular cash flow to supplement your income. 2nd Story Real Estate Investments only deals with properties that can provide positive cash flow. This means money in your pocket every month.
“Ninety percent of all millionaires become so through owning real estate.”