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Investing in income properties is a proven and time tested method of creating multiple income streams with a relatively small initial outlay.
Why rental income properties make a sound investment?
There are a number of reasons which make investing in real estate rental properties a sound investment as below;
Investor makes money by leveraging and using OPM (Other People's Money)
By using other people’s money means using bank's money ( via a mortgage loan) to purchase the property,
and via tenant’s rent money for making mortgage payments and other property bills. For most rental properties in
good locations the rental payments are normally more than enough to cover all expenses including mortgage payments, property taxes, insurance, and others.
Real estate - time tested and proven long term stable investment
Over the last few decades real estate in most Canadian cities have provided solid returns on investments.
In some growing neighbourhoods’ real estate appreciation rates has ranged well over 10% per annum, i.e. a
property purchased for $400,000 went up by $40,000 in one year.
In addition, real estate also offers an opportunity to diversify one's portfolio with a tangible asset beyond equities and the stock market.
Favourable Tax advantages
The other big advantage of investing in Rental Income properties is that most of the rental income is offset by
making allowable tax deductions including the interest paid on mortgage payments and loans, property taxes, insurance,
advertising, utilities expenses, maintenance, and other expenses.
THIS IS HOW IT MAKES MONEY:
Rental Income properties produce multiple income streams from one investment:
Monthly profit: In most rental properties a monthly cash flow starts right from the day it is purchased.
This means that after paying mortgage payments, property taxes, insurance, and all other carrying expenses from the rental incomes,
the property still makes monthly profit.
Equity Growth: The Tenant pays off your mortgage – a mortgage payment typically comprises of a principal portion and an interest portion.
Over time as mortgage payments are made through tenant’s rent, more and more of the principal portion gets accumulated until the property is fully
paid off from the rental incomes.
Appreciation: A Good property in a good location always appreciates over time. As the property appreciates,
its market value keeps going up, and so does investor's equity in the property.
The Multiplier Affect – with time as the investor's equity grows, the property can be refinanced and the returns earned
from the first rental income property can be used to purchase another property, and this process repeated as many times as the investor wants.
EXAMPLE:
Assume you purchase an income property for $400,000 with 15% down payment.
In a reasonably good neighbourhood you can expect an appreciating rate of around 7% p.a. & upwards. At the end of the first year,
the above property is worth $ 428,000…at the end of 5th year it can be expected around $550,000. Thus by investing $60,000,
the property has grown by about $ 90,000, PLUS add the equity portion of mortgage payments accumulated over the 5 years.
After 5 years the above property can be refinanced, all earned cash taken out and re-invested in another income property…..and so on.
JOINT VENTURE PROJECTS
We have an ongoing 'Joint Venture' program which offers investors the option to participate as 'Active' investors, or 'Passive' investors.
The minimum investment amount in this program is $ 10,000, and can vary to any amount upwards of $ 10,000.
THE WHOLE TIME YOUR INTEREST WILL BE SECURED BY REAL ESTATE. Please contact us for further details.
RISKS INVOLVED WITH RENTAL INCOME PROPERTIES?
Like with any other investment there are also some risks associated with investing in rental income properties as below;
Timing of purchase - Buying at a time when the real estate prices are at the peak is certainly not a favourable factor.
The key is to pickup properties at the right times in stable or falling real estate markets.
Location - If the property is located in a good neighbourhood with easy access to all amenities including public transport,
chances are it will stay leased for longer durations, attract good quality tenants, and be leased at higher rents. Of course,
some vacancy is always expected and it is a part of this business.
Age and Condition of the property - Older properties generally require more yearly maintenance and therefore erode the profits.
To minimise this risk it is important to thoroughly assess the condition of key items including the roof, furnace,
air conditioning, appliances, electrical systems, plumbing, and leakages in the basement.
A WORD OF CAUTION...
Not every property for sale in the market is OK for purchase as an 'investment property', and not 'everyone'
in the market is adequately trained to identify a 'good' investment from a 'bad' investment. One wrong decision can make or break your investment dreams!!
Selection of a good ‘income property’ requires a lot of experience, judgement, research, up to date knowledge of local areas and latest growth trends.
CONTACT US FIRST...
Our team members are fully trained professionals with up to date knowledge of the current prices and trends of the real estate
market including what comparable properties are selling for or renting for, and we know what the market demand is; when we arrive at fair market
values, we aren't just guessing, we know it exactly.
IN ADDITION...
Reaching more buyers/ seller/ tenants: Because of our experience and contacts in the industry we have a well established
network in the local real estate market. It enables us to locate genuine buyers/ seller/ and tenants faster thus minimising loss of potential
rental incomes. We have in-house facilities to make full credit and reference checks of potential tenants thus minimising risk of ending up in
courts trying to recoup rents, dues, and other damages, and going through the avoidable stress.
Less wasted time: Showings on properties are managed by our realtor members, who can pre-screen the properties and show
properties at mutually convenient times.
Local presence: Once your property is rented, we keep an eye on your property while you are away, to ensure that the tenants
are taking care of it. Having someone local means that any problems found can be corrected faster.
Familiar with local laws: All of our team leaders are licensed professionals including realtors, mortgage brokers,
professional engineers, and trades people, and as such are on top of developments that affect your investment property.
Maintenance experience: We have in house resources for both routine repairs and emergencies.
We know how to avoid unnecessary repairs and reduce your maintenance expenses. Also, we have a working relationship with
specialist contractors for each type of job.
Faster response and more complete information: Using latest communication systems & computers we closely monitor and track things
such as repairs, rent collection, correspondence and upcoming events such as inspections and lease renewals, we can provide a faster response
to you and your tenants, and keep you better informed.
Access to LOW interest mortgages: To secure quick finance approvals we have an in house Mortgage Brokerage with instant
electronic access to over 50 lenders, including many of the nation's most well respected financial institutions; Mortgage Investment Bankers,
and private funds. We can arrange mortgage approvals in the shortest possible times, at lowest possible rates, and without any hassles.
Budget Renovations: We have an in house team of professionals trained to provide a full range of home
renovation and remodelling services, including remodelling of washrooms, kitchens, and other living areas, safe rooms,
finishing works in basements, access to basements, roofing, deck additions, fences, gutters, house painting, and demolition etc.
Manage Properties: We provide full range of property management services for all types of commercial & residential
properties including single-family homes, multiple units such as: duplexes, townhouses, apartments, and condominiums. Our services include –
Leasing, Rent collection, Payment of bills, Accounting Services, Financial reporting, Property Inspections, Repairs & Maintenance, Estimates
for capital improvement, Emergency service, Eviction coordination
AVAILABLE PROPERTIES:
For immediate investor requirements, we have an inventory of ready-to-go 'income' properties in different areas. Each of these
properties is fully upgraded and leased, and generates a positive cash flow.
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