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  • Writer's pictureAlisa Aragon-Lloyd

Create Wealth Through Real Estate

By Alisa Aragon-Lloyd, as seen in "New Home + Condo Guide" magazine, May 24, 2023

Investing involves putting your money to work through buying and holding products with the expectation the investment will help grow your money. It could boost your returns or provide the required amount of income to help you achieve your financial goals. In many cases, the growth and income that can come from investing are a key ingredient for making financial goals achievable.

Real estate on its own offers cash flow, tax breaks, equity building, competitive risk-adjusted returns and a hedge against inflation. Real estate can also enhance a portfolio by lowering volatility through diversification, whether you invest in physical properties or a real estate investment trust (REIT).

Investing doesn’t have to be complicated: It’s all about strategies

Your personal investment strategy should be based on your financial goals. Whether you own a home or plan to purchase one, real estate is one of the best, low-risk ways to build your financial portfolio when you understand the many ways to travel through your financial journey.

A financing expert with an investment team can provide you with the knowledge and guidance to help you understand your options, whether they are short term or long term. Suitable planning allows you to invest in your future with confidence.

There are many reasons to invest in real estate. It might seem impossible, but when you understand it, it is very simple.

The first step is to assess your finances to see what you can qualify for. Your personal investment strategy should be based on your current financial picture and what you envision your retirement looking like. For example, travel, independent living as you age or snowbirding in the winter.

Real estate has a high tangible asset value: It appreciates in value over time

Real estate appreciates in value over time in many ways. One of the best things about real estate is that you can improve a property by adding value. This can be done by updating the kitchen and/or bathrooms, finishing the basement, building a laneway house, or adding a deck.

You build equity in your real estate investments

If you invest in actual houses, your equity in the home should increase the longer you own it. Equity is the portion of the home you own outright, as opposed to the part you owe to the lender if you have a mortgage.

As you pay off your mortgage, you generally build more equity (with the exception that the market could take a severe downturn, which is generally temporary, so if you hold on to the property until the market stabilizes, your ability to build equity should resume). Also, as the value of the property appreciates through the years, it is worth more and adds to your equity.

Leveraging your equity

One great option with real estate investments is that you can take out equity from your property. Most often, these are used for home renovations or to invest in other properties, all of which are wealth builders.

Real estate is a way to diversify your portfolio

There are ways to lower some of your risk, especially if you are investing funds in other opportunities. Most experts recommend diversifying your portfolio, so you won’t lose everything in one fell swoop if where you are most heavily invested happens to go south. Real estate is an excellent place to park some of your money – a much safer place than most other investments.

It’s a good way (forced savings) to save for retirement

A long-term mortgage allows you to build equity in your own home. If you choose to downsize when you’ve paid off your loan, it’s likely you will be able to downsize and still have some money left over. Also, you may be able to leverage that equity and have your money make you more money. Either way, you have created options for you to create more wealth.

Work with a professional

Whatever your personal financial goals are, we are happy to assist you with creating more wealth through real estate.

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