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Investing in Calgary Real Estate
It’s hard to deny the fact that most of the wealthiest people in the world have built a majority of their fortune by accumulating real estate. Building wealth through real estate stands outs as being a very common approach and re-occurring trend among investors.
So what exactly is so attractive about investing in real estate?
There multiple reasons however I have found there to be four main fundamental principles as to why real estate investing is so attractive:
When buying real estate particularly a house or a well located plot of land you are typically able to borrow roughly 80% of the purchase price without too much of a hassle. If you approached a lender and told them you would like to buy a boat load of publically listed shares and need a loan to buy 80% of them they would most likely tell you to take a hike.
Well located real estate is set to a much higher standard as being regarded as a more secure and solid asset.
Everyone Needs to Live Somewhere
As long as people live in the particular area, there will be a demand for real estate.
There is only so much land available and only so much well located land near transit, shopping centers, restaurants, employment ect. Yes, taller buildings can always be built but we are limited to the amount of land there is to purchase. No one is making more of it!
The only positive direction you want your real estate asset to go is up in value. If your property depreciates in value from the time you buy it to the time you would like to sell it you could find yourself owing more than you originally borrowed! While that seems quite intimidating and something everyone wants to avoid it is also relatively easy to avoid by selecting the right property in the right location for the right reasons.
When a particular area has their population on the rise the land and property values will naturally increase. It’s a fundamental result of supply and demand which influences the value of almost every commodity we have.
When you hear of plans for major expansion such as a new shopping center is being built, a new freeway or public transportation hub is being constructed – buy property near there BEFORE the new construction is up and running. In most cases the land value will start to increase several years before the completion of the project so the earlier you act when you hear about the plans the better return you will see on your investment.
Property values as I’m sure you have seen do not increase at a steady consistent rate year after year. Several years may pass with very little to no increase in value or values may drop. Then all of a sudden we may experience significant gains in value. Our real estate market is cyclical in nature when you look to invest in the long term – such as a 7 – 10 year period. It is not unreasonable to expect a significant increase in value (such as doubling) of a well selected property every 10 or so years.
Making Your First Purchase or Real Estate Investment
This is definitely the hardest part – coming up with the 20% deposit to fund the initial investment. Once you have bought your first well selected property you can use the equity built in that property for each future purchase. As time goes on you are creating a snowball effect and you will see your assets and wealth grow as well. Keep in mind this is dependent on stable or lower market conditions and purchasing a well selected property in a well selected location.
If you are interested in further exploring investing in real estate contact us to sign up for our Investment Property Update. This update is a way for us to highlight some great properties that have great investment potential.
If you have any questions about investing in a particular area or property let us know and we are happy to help!