Investing in Real Estate in Northern Ontario

Benefits and Drawbacks of Real Estate Investment

People mostly buy real estate for making a home or using it for other purposes.  However, buying property in Southern Ontario is also seen as a profitable investment by many.   Investment in real estate may not be as simple as investing in shares and bonds since buying property is a complicated process and it may take a lot of patience and time before getting some gain.  Let us discuss the pros and cons of investing in real estate.

The age old practice of getting a regular income from real estate is giving it to somebody on rent.  Since the ownership of the property lies with the investor, it becomes his responsibility to pay the mortgage, costs of maintenance and payment of taxes in the property.  The property owner may fix appropriate rent for his property to pay for all above expenditure and also give him an additional profit.  Nevertheless, it is seen that the rental rates in most of the places do not cover all the above expenditure and provide extra money. Hence the practice adopted is to charge rent to cover basic taxes and mortgage so that once the mortgage is finished, the property owner can take the full rent as an income.  In addition to this, the property value consistently increases over time and the landlord can ultimately gain from it when selling the property.

There are certain risk factors involved in making investments in property. There is a possibility that you may not get a tenant for some time. In such a case, you may end up paying the mortgage and taxes without any having any income from the property.  In the worst case, you may get a terrible tenant, who misuses and damages the property. However, such a scenario can be avoided if you buy property at places where there is a demand for rental properties and if you take proper care while selecting a tenant. 

As compared to investments in stocks and bonds, you need to take much more responsibilities and efforts when you invest in property.  After investing in shares, you do not need to do anything but watch it increase in value or give you dividends.  But when investing in property, you have the responsibility for maintaining and managing the property to ensure that everything including plumbing and electrical gadgets work properly.  

Investors in property can avoid all the inconvenience of owning and maintaining a property by being a member of Real Estate Investment Groups.  Such a Group will jointly buy or construct apartments or houses and distribute it for individual ownership among its member investors. The company will collectively manage all the units including routine maintenance, payment of taxes and selection of tenants etc, after charging a percentage of rent.  This makes this the safest way of investing in real estate.

Real estate investment has its own benefits and pitfalls.  As with any other investment, you need to take your decision after doing adequate research.