Over the long term, real estate investment returns have remained competitive with those of stocks and bonds. That being said, and with Wall Street on shaky ground, you should feel a bit safer about purchasing real estate as an investment. Whether it's your first home or your third apartment complex, you should weigh your options before you take the investment plunge. The following is an advantage comparison between buying a single-dwelling home, a condo, or a multi-unit complex.
While condos share many of the tax advantages with houses, their popularity is ever-increasing and their value is rising at a much faster and consistent rate.
1. The first condo I ever stayed at was a Mont Tremblant condo, it was a true revelation. So when buying a condo as opposed to renting an apartment, you have the option to do anything you want to increase its value. Small investments out of the gate will result in decent profits at the finish line when you sell.
2. Condos allow single people or young couples to live near their jobs in the city. Many young professionals prefer to live in an urban setting near the action, and cannot afford to buy a house in the 'burbs.
3. When buying a condo you become part of an association which takes care of the necessary maintenance needed in the building and on the property. This saves you from having to chase people for your plumbing or to shovel the driveway, and all you need is to pay a monthly fee.
4. As more and more cars hit the roads, people become less and less tolerant of being stuck in traffic. Condos are extremely appealing for their downtown proximity, and have a solid track record for increasing in value.
When buying a rental property there are two things you should consider: Do you have any home renovations ideas or are you planning on renovating the property in order to sell it for a profit in a few years? Or are you simply looking for a steady stream of income from your rental? If you are planning on selling for profit then you should buy a property with a low price so you can afford to fix it up, but pay careful attention to your expected ownership timeline, because the longer you own the property, the more repairs you'll have to make. However, as is the case with most investments, the longer you stay in the less likely any dips in the market will affect you. Also to consider is whether you want a single dwelling or a multi-unit complex. A single dwelling costs less and subsequently provides less profit, while a multi-unit complex costs much more and requires a lot more maintenance.
1. If you are purchasing a multiunit property you have the option to live in one of the units as a landlord. This allows you to make sure that your property is well taken care and you are on site for any required maintenance.
2. The income from your other units will most likely be sufficient to cover your mortgage payment, allowing you to invest this money elsewhere.
3. Once you become a landlord you start meeting other landlords, plumbers, electricians, etc. and you begin to develop a network of contacts. If your reputation is solid then you may start hearing about other investments and properties that become available in the future.
4. If you've chosen a property in a favorable location you are sure to have a consistent flow of interested tenants, and if your property is well maintained, happy tenants. A good real estate investment analysis or a real estate agent can help you find the perfect location with the best amenities to meet the needs of the neighborhood's demographics.
5. You have a much better chance of developing a positive cash flow from a rental property than from buying a condo or a house. While the condo or the house may eventually appreciate in value over time, this investment will only pay off in the end when you sell, whereas you can be making money each month off your rental property, and again, allowing you to invest these profits elsewhere.
Single dwelling Homes
1. The bad news in buying a house is that the largest portion of your mortgage payment goes towards interest. The good news is that the interest is deductible on your tax return.
2. Any renovations you make will only help to increase the value of your home. House flipping has become a popular investment strategy, where handy folk buy houses for cheap, and with their own tools and do-it-yourself spirit they perform their own renovations. They sell, and move on to the next project. The larger the property the more options you have for landscaping projects and house additions like decks or extra rooms. These additions are not possible when living in a condo. While your instinct may be to invest in a single family dwelling, it holds true that aging homeowners will need to downsize. For the foreseeable future condos and rental properties are experiencing a higher and faster profit turn over than building equity on the single family dwelling model of investment.