“One thing I’ve been thinking about as a venture capitalist in Silicon Valley is the vast majority of the capital I give to the companies is just going to landlords. It’s going to commercial real estate and even more to urban slumlords of one sort or another"- Peter Thiel
Bitcoin was a huge story in 2017 as the price of the cryptocurrency skyrocket. Bitcoin is a medium of exchange that is powered by advanced blockchain technology. It provides a good way for people to transfer money across the world with little government regulation or interference. Even with today's volatility there is no doubt that bitcoin will have a future. A general movement towards a cashless society coupled with globalization will ensure its future.
Bitcoin has been attracting many millenials as an investment opportunity, it couples the promise of getting rich quick and a disruption to the fiat banking system. Millennials have also shown a disinterest in real estate investing, perhaps due to being being priced out of the market or a desire for mobility. Yet historically real estate has produced more wealth than any other industry in the history of time. And there are clear buying opportunities especially in the city of Calgary.
Below are 5 reasons why real estate is a better investment than bitcoin.
1) Control- Once you own a piece of real estate you have control of this asset. Real estate markets fluctuate but with creativity and hard work an investor can maximize returns even during down times. Simple things like painting the walls, landscaping and using airbnb can yield higher returns. With bitcoin your riding a roll coaster and there is little a small scale investor can do other than discuss prices online, "HODL" and "buy the dips".
2) Leverage- There are few investments that the bigs banks in Canada will give you money for. This means, for example, $100,000 can buy four properties at $25,000 down instead of just one property for $100,000. Leverage can magnify your profits. You would find few banks willing to leverage your bitcoin investment.
3) Taxes- Investenting in real estate will allow you many tax advantages. The interest on your mortgage debt is deductible as a business expense. As well you can deduct, property tax, operating expenses, depreciation, and repairs. A real estate side hustle is an amazing way to keep large amounts of your money going to the taxes.
4) Income Generating- Cash flow is the holy grail of any investment. Regular cash flow from rents or interest payments. I consistently see unleveraged returns of 5-10% from this one method of making money. With reasonable leverage, it’s possible to see these returns jump to the 10-15% range or better.
5) Long Term Asset- Equity: If you borrow money to buy a rental property, your tenants will essentially pays off the property for you. The rent cheques each month will pay the principal paydown, your equity gets bigger and bigger like a forced savings account. If the property appreciates than you will be in for a major windfall. And thats how people get really rich in Real Estate.
Calgary has the best real estate opportunities in the entire country right now. With many young professionals being priced out of the market in Vancouver and Toronto. Using a Realtor throughout the process who can guide you towards investment opportunities that have great margins and profit potential is the best way to kick start the process.
While Real Estate is a great investment, it can also certainly lose money on real estate. This is where a realtor comes to make sure you understand neighbourhoods, financing, fees, repairs and market trends.