If you’re torn between investing in either RRSPs or real estate, don’t be.

“People have a tendency to think of either RRSPs or real estate investing for their retirement plan,” Calum Ross of VERICO told CREW. “The reality is that consumers need both.”

“RRSPs are diverse and can be adjusted to accommodate different risk tolerances. They also offer certain tax deferment benefits. One of the greatest benefits of real estate investing is that you can utilize the equity in your investment properties to fund other investments.” — Sean Kavanagh

Ross defines retirement not as the point at which somebody stops working, but rather as the point at which they no longer need to work. If someone has enough money in their investment accounts, debts are easily repaid in full and a mortgage becomes an instrument that is acquired by design and not out of necessity.

Moreover, Ross notes that real estate investing doesn’t have the same tax deferral on capital gains that RRSPs have. He recommends using home equity appreciation as an RRSP catch-up.

“People often confuse RRSPs as being the safer and more conservative investment when compared with real estate investment options. However, it is important to remember that RRSPs are made up of stocks and the value of your RRSP investment is directly tied to the stock market. When the stock market goes up, your RRSP gains in value, while conversely, the value of your investment goes down when the stock market goes down.” — Sean Kavanagh

Cash flow is still an important component of investing, and that means investors should seek blue-chip properties that they own directly. Of course, choosing the right property in the right location is an altogether different task. Ross also states “It’s not just about the actual property today, it’s also about where the underlying economic fundamentals will be in five or 10 years.”

The growth of your real estate investment over time depends on the condition of the local real estate market. Purchasing a home where the area rental rates cover your monthly expenses is key to successful real estate investing.

Real Estate and RRSPs both have the potential for excellent investment opportunities. The best investment portfolio is a diverse portfolio, so we would suggest you look at adding both to your long term investment strategy.

Need help navigating the Real Estate Market?
Contact us at: info@905realestateguys.com
THE 905 REAL ESTATE GUYS
Sean Kavanagh 905.220.9198
Leo Manchisi 905.334.9650