Yesterday, I wrote about the fact that I truly believe that we can still make money out of the stock market. I think that there are 3 main ways to make a lot of money (there is technically a 4th one which would implicate you working like a damned demon for a company for several years and hope to get the VP position). The first one is to invest in the stock market. This one is quite “easy” as if you simply buy ETF’s and wait 30 years, you will wake up one day with a lot of money! However, it requires golden guts 😉
The second option that we will be discussing today is through rental properties. This is the baby boomer’s classic success story of the guy who didn’t have much education but was a hard worker. He pilled up his money to buy his first property, than his second one and he bought a land, build 20 properties on it and he is now living by the lake… I must agree with you that I also fell in love for this story. We all know people who succeeded through real estate. We all know them because real estate is easy to see, buildings last and it makes us think it is safer.
However, while I still think that we can make money through real estate, it is far from being a safe investment. There plenty of risk that you must consider (illiquidity, default payment from renters, major repairs, drop in value (think of the American market), etc.). So don’t think that it is that amazing! What is really cool though, is that it can be used as a big “dividend tank” that send you money months after months!
Why you can still make money with real estate:
Depending on where you live, there are several reasons why you can still make money through rental properties. The major point is that borrowing doesn’t cost much right now. I am convinced that people who have the guts to borrow as much as they can today will be greatly rewarded in a few years. We have a unique chance of paying almost no interest in order to buy depreciated assets… Doesn’t this sound like the opportunity of a lifetime?
The second point is that there are a lot of rental properties which has been depreciated in value. This is probably a great timing to start looking around and look at how much it would cost to buy real estate in your area. Unfortunately, this is not the case everywhere. In Quebec, value didn’t drop much. In fact, my house keeps increasing in value years after years. However, I would be curious to look at properties in Florida!
The third point is the blessing of having a recession (say WHAT?). Well if people start losing their job, they will probably consider selling their house and start looking for an apartment. Therefore, you have better chance of getting renters. On the other side, it might become harder to get paid on time 😉 Nonetheless, the demand for apartment will definitely increase in the upcoming year. I don’t think that young couple will get their first 350K mortgage at the age of 25 anymore… they will stay in an apartment for a few more years and gather more money before buying! This would be the client you should be looking for!
Any thoughts on real estate investing?
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