Should you consider real estate investing for your child?
Most parents at some point will wonder which is the best investment to set their children up for financial success. The initial thoughts will inevitably be college plans like the Registered Education Savings Plan (RESP), stocks, or even a retirement plan in the child’s name, but perhaps real estate investing is a better option.
The Pros Of Real Estate Investing For Your Child
1. Getting in early is the best way to make money.
As the price of homes and real estate investing increases, many first-time homebuyers are struggling to afford their own homes. With that in mind, purchasing investment properties, or going in as an investment partner while your child is still young is likely to provide capital that can be used for college or your child’s first home, or perhaps even as a starter for their own business.
Historically, real estate has been a sound investment when you have the ability to hold on to it. According to Precondo.ca, and using Toronto as an example, the market may fluctuate within a short period (like a housing bubble), but over the long-term, the real estate market continues to steadily rise. From 2009 through 2019, prices increased on both condos and single-family housing, although more on single-family than condos.
2. Real estate is considered less risky than stocks
“While stocks are a well-known investment option, not everyone knows that buying real estate is also considered an investment. Under the right circumstances, real estate can be an alternative to stocks, offering lower risk, yielding better returns, and providing greater diversification.” (Investopedia.com)
3. Real estate can be liquidated reasonably easily.
There is a risk involved in every type of investment you make. If you choose to prepay for your child’s college plan there are benefits and downfalls. If you pay into the RESP and your child decides not to go to college, or you need the money invested for something else, you may have a fight on your hands. There are eligibility factors to withdrawing the money, and you’ll also have to pay taxes plus a penalty of 20% (cstspark.ca)
With real estate, you cannot sell at the flip of a switch, but you do have more control over the decisions that are made. Once liquidated, the profit you made is yours to use for whatever you choose. So, if your child decides to pass on college, it could be used to go on a round-the-world trip!
According to Market Watch, college and universities may change drastically over the next decade, so a RESP may not be the safe bet you’re expecting.
4. Investing in real estate breeds possibilities beyond making money
If you own real estate, you have a tangible thing that you can see, improve, and use. You can purchase a condo on the lake and rent it out to make money. But, unlike stocks or a college fund, you can also use the condo for vacations, for business entertaining, as a place for your child to live during college, or as a primary residence. There is the element of making money, but there’s the added benefit of enriching your life when you invest in real estate.
How Do You Invest In Real Estate For Your Child’s Future?
Before you make the decision of real estate investing for your child, schedule a consultation with us at Regalway Homes. Our experts will walk you through the important risks to acknowledge as well as the glorious rewards to help you make your decision with a clear mind.
Regalway Homes | info@regalwayhomes.com | +905-462-4960