The Pros and Cons Of Buying An Investment Property
A rental property can be a valuable addition to a diverse portfolio, offering a real estate investor some passive income in the form of rental income. Real estate adds diversity to reduce your overall investment risks; there are different strategies in real estate investment that can be beneficial.
However, before taking the leap into the real estate business, it is important to be aware of the pros and cons to owning rental property.
Types Of Investments
Real estate investment trusts are the easiest options and are highly passive. These are more like dividend-paying stocks and do not offer the benefits of buying actual property. Some investors are interested in flipping properties to gain income when the property value goes up, but expert knowledge and a lot of effort are needed.
Rental real estate, on the other hand, can offer an excellent positive cash flow and be rewarding. Even within this type of investment, there are options, from short or long-term rental property models, or a lifestyle investment options.
Lifestyle Investment Options
A lifestyle investment is one that prioritizes life experiences over a return on investment, such as a vacation property that encourages family time and recreation. With current inflation and market conditions, a recreational property that is purchased as a lifestyle investment provides the additional benefit of maintaining or increasing value. It enables more cost-effective vacation time since it eliminates paying for hotels.
A lifestyle investment differs from a traditional investment, like a rental property, in that it is not singularly focused on the return on investment. A hybrid model is also possible, however, where a property is purchased for lifestyle reasons but is also used for rental property income when not in use, for a 'best of both worlds situation.
A key benefit of real estate ownership is that property values of carefully-chosen properties increase over time. A land is a solid option for maintaining and increasing value.
There can also be tax benefits, with ways to reduce your taxable income. Rental income does not count as self-employment for tax purposes. Depending on your exact circumstances, the tax benefits can be quite significant.
Rental properties deliver regular, monthly cash flow. In addition, you are using other people's money to build your own equity - your tenants pay for your property for you. With more equity, you can leverage your property to grow your wealth and make more money.
Real estate is also a good hedge against inflation, which is particularly of value in times of high inflation similar to what we are currently experiencing.
Inflation erodes the value of many investments, but real estate investments tend to keep up with it better.
You do need to have enough money upfront to break into the real estate market. It is a long-term investment, so you also need to be able to be patient to get results. It is an investment option with poor liquidity, so you should allow for that. You also need to spend time doing research and investigating options to choose wisely.
You need to carefully allow for maintenance costs, property taxes, mortgage interest, insurance, and other expenses. If you will not be maintaining the property yourself, you will need to pay for a property manager.
There are potential complications and risks if you are unlucky and have difficult tenants or the neighbourhood declines.
Finally, you should be aware of the increased liability you will take on if someone is injured on your property.
Untapped Options For Real Estate Investors In Turks and Caicos
According to Canadian Real Estate Magazine, the Untapped Investor Market in Turks and Caicos offers an attractive alternative option for Canadian investors or those looking to buy property in sunnier climates.
With current economic conditions and potential rate increases, Canadian investors are looking for better options. A real estate investment is always a more secure option, so investment properties are looking more appealing.
Turks and Caicos is an ideal location for those interested in the hybrid model of lifestyle investing, using vacation property to generate more cash when it is not being used.
Vacation Properties That Offer Rental Income
While Turks and Caicos provide a favourable environment for Canadian investors, many find they want to take advantage of the beautiful islands for easy, cost-effective vacation homes, as well. There is the opportunity for a balance of using the passive income to counteract the property expenses, although the balance can be shifted to maximize earning potential.
The combination of return on investment and easy access to sunny vacations at any time certainly makes an appealing proposition.
Turks and Caicos Vacation and Rental Property Opportunities
Savvy investors may be looking to take advantage of adding lifestyle investment properties, using the hybrid model of a vacation property that can also generate monthly income, while also taking advantage of the untapped Turks and Caicos market. Adding a lifestyle investment commercial property that leverages the positive market conditions that Turks and Caicos offers is an excellent option for any investment portfolio.
Kokomo Botanical Resort offers vacation cottage ownership for an excellent opportunity for real estate investing in Turks and Caicos. This enables an easy entry into a hybrid model of a lifestyle investment.
Your cottage is available for your personal use, for family vacation time whenever you wish to use it, delivering an exceptional vacation experience, without having to pay for hotels. When you are not using your cottage, it generates rental cash flow for you, to help you build wealth. If empty, it automatically goes into the resort rental pool carefully handled by our property managers.
Cottage owners receive all the benefits of rental property income, but with stress-free ownership and property management.
This gives you access to affordable vacation home prices in Turks and Caicos, with a luxury lifestyle experience, while it facilitates buying rental property in a tropical island paradise for a money-generating opportunity.