Real estate has long been one of the most secure and proven ways of achieving relatively high returns on an investment, and KLRT Commercial is here to help those who have decided to invest in commercial and industrial real estate here in Red Deer County, Central Alberta, to achieve their aims.
For those who may still be unsure of the numerous benefits of investing in real estate, be that commercial, industrial or residential, we have put together a guide to why real estate investment is a good idea for your finances, your future, and your family.
Compared to certain other commodities, residential, commercial or industrial real estate can be relied on to maintain a relatively constant value and return on investment. As the market is based on a strong, perpetual need for property, fluctuations seen on investments in luxury goods or passing trends are not there, giving the investor confidence that his capital will not be wiped out overnight.
Although we do know the value of residential, commercial or industrial real estate can fall as well as rise, it doesn’t happen as suddenly as stocks or other investments may. For real estate investors who rent out property to tenants, the income from the rent can be quite safely predicted to remain stable over a period of years.
Providing the property is occupied, the payment of this rent is constant also. Even during times of recession, when sales of goods may not be as high as previously, real estate rent always needs to be paid. Whatever the economic conditions, investment in residential, commercial or industrial real estate provides a steady stream of income to those who buy with a view to rent out to others.
Unlike stocks or gold, investment in real estate brings two ways to earn money back on your initial outlay.
While your property can bring an income stream through rent, it can also be expected to appreciate in value over the course of a mortgage repayment term. While stocks and gold can also become worth more than you bought them for, you do have to sell them again to take advantage of this. Real estate can be bringing in an ongoing income while this is happening, and you can still decide to sell it for more than you paid if the value does indeed rise.
Another benefit of using residential, commercial or industrial real estate as a means of income is the way rent will increase as the cost of living does. Money deposited in a bank account will earn interest, although often at a lower rate than the real world cost of living increase, essentially meaning the money is becoming worth less as time passes.
As rents rise with the cost of living, they push up the prices of property for sale too, giving a double benefit to real estate owners who rent out property to tenants.
Although taking out a mortgage to invest in real estate is so normal we don’t tend to think too much about what is really happening, the situation essentially involves investing in your own future with someone else’s money. This practice of using debt to invest in more than would be possible with cash is known as leveraging, and is one of the most effective ways of seeing a sizeable return on a smaller investment; nowhere is this system more common or as powerful as in the residential, commercial and industrial real estate industry.
The reason banks are happy to lend such large sums of money for purchases of real estate is that they know it to be one of the safest and most profitable investments available, with higher than average returns on lower than average risks. No institution will lend such a sum of money, over such a length of time, for investment in stocks or gold.
For those already in the financial position to be able to invest in a buy-to-let property, it’s possible to take out a loan on residential, commercial or industrial real estate and structure the deal so no repayments come from their pockets, while still receiving all the rewards in the long term.
For many people, putting money away for the future isn’t easy. They may have the income to do so but, when retirement and the pension age seem so far away, not the mindset. Investing in something tangible that requires monthly repayments helps people to visualize where their money is going, and no investment is more tangible than bricks and mortar.
As we have already seen, investing in real estate offers great stability over the long term, and once the property has been paid off, it should be worth more than it was initially bought for. That doesn’t mean it should necessarily be sold off for profit though. As rising prices mean younger generations are struggling to enter the real estate market, leaving property to your offspring is one of the best ways to help set them up for a financially secure future of their own.
With no mortgage to consider, they may too have the financial freedom to invest in their own residential, commercial or industrial real estate for rent, and build their own portfolio and legacy for their children too.
If you’re looking for commercial or industrial real estate in Red Deer to add to your portfolio or for your business, contact the KLRT Commercial team today.