How would you like to earn 40% return on your investment every year? If it’s that good, it’s probably too good to believe... It must be a scam... There is no way I am interested in anything risky... These are some of the thoughts that comes in mind to an astute investor when they hear unprecedented returns on investments.
Real Estate is the No. 1 Choice for the Afﬂuent
STOP for a second and ask yourself: “Why does the rich invest a large portion of their money in real estate”? Do you ever wonder about that?
The answer lies in the leverage that they get out of their investment and the reliable security that real estate has to offer.
When you purchase a property, you can drive by it every day to check on it or make improvements to it and its value is going to increase if you take good care of it.
High Returns by Real Estate
Okay, what is leverage?
In a country like Canada, most home buyers who are going to live in the property only have to put down a minimum of 5% down payment and the bank is going to lend you the rest of the funds to close the deal.
Leverage is getting return on other people’s money.
For investors this rule is different of course. Canadian investors need to have a minimum of 20% downpayment to get approved by a lender. It is also possible for foreign investors to purchase a property in Canada. Most likely they need to partner with a local investor to make the management process seamless and to easily get approved for a mortgage.
Calgary is located in the province on Alberta and it is one of those Canadian cities that is just booming right now due to the global demand of oil. Calgary’s population increases every year by at least 15,000 - 20,000 people due to in-migration from other provinces and countries.
One of my REALTOR friends, Joe Samson (website: http://www.JoeSamson.com) is located in Calgary had given me the following scenario of an investment transaction:
- Let’s say you purchase an average house for $350,000.
- The bank requires you to invest 20% of your own money or $70,000.
- A house like this you can rent for $1,900 per month.
- The mortgage payments going to be $1,400 plus property taxes about $200, management fees of $120, maintenance, etc...
As you can see from the details above, the property is not going to be having a huge cash ﬂow each month, but it looks very promising that at a minimum it’s going to break even to keep your investment secure.
The real proﬁt comes from the appreciation of the property. In Calgary, home values have increased 8% within the last year.
But WAIT A MINUTE! That is 8% on the entire value of the property. It means $350,000 x 8% = $28,000 proﬁt or increase on your investment’s overall value.
Therefore your true ROI is proﬁt/ investment ($28,000 / $70,000) equals 40 percent!
To get more information about real estate in Calgary, please visit my friend’s website and explore the possibilities of owning real estate in Canada.
Can I Invest in Costa Rica as Well?
If Canada seems to be a little too far for you, we can certainly help you closer to home. Give us a call anytime and one of our team members is going to make sure that you are well looked after.