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The Vancouver area Real Estate market has taken a significant hit lately, and the bloom is certainly off the rose. This is partly a result of the challenges now facing all world finance markets, and also due to a “natural” turning of the local demand and valuation cycle. A bit of perspective should be applied at this time however, and the changing market should be view in the light of potential opportunity rather than inevitable disaster.  A decision to invest in real estate (with appropriate caution) is still a good decision for those able and willing to permit real estate to work over the longer term. History supports this view and real estate has provided tremendous results for a great variety of buyers including 1st time homeowners, non-profit societies, small and large investors, business owners and institutions.  Real estate provides housing for families, facilities to provide services for business, plant and equipment for industries and great returns for small and large investors -  and owners - alike!

As an investment, Real Estate is Unique in that it offers a range of features and benefits that don’t exist, together, in any other type of investment.  These include:

Leverage:  Even though real estate is a “big ticket” expenditure, properties can be bought with a partial small, and even no downpayment or cash investment.  This allows a person to control a large asset - with the great potential to create wealth - by using a limited investment.  Leverage, of course, can be very risky, unless there is sufficient ....

Cash Flow: Land and buildings can provide rental income to cover expenses and provide a return of, and on, investment for investors.  Homeowners and other users of real estate provide their own “cash  flow” by paying mortgages or loans instead of rent. In most cases, Owner’s equity increases as mortgages are paid down and as the property experiences ....  

Capital Appreciation and Compound Growth: As populations grow and communities experience cycles of prosperity, values move upward. This growth compounds on the value of real estate and, over time, dramatic returns occur - especially if leverage has been used. Other factors also cause values to increase, including changes in use and the ability of the owner to add value by exercising ....

Control: Unlike most other investment types, real estate allows the owner to contribute to the value of the investment. This can be done by determining how and by whom the property is used, how it is maintained and how it is improved.  A “hands on” owner is often able to “bonus” his investment return, while reaping the benefits of ....

Tax Shelter:  The increase in equity and wealth from principal residences is non-taxable.  Proceeds of value increases for investment properties are taxed only on sale, and cash flows are taxable only when in excess of expenses, including financing costs. Negative cash flows can be offset against other income (both personal and investment), so the Revenue Canada effectively subsidizes leverage and acquisition of other investments.  Additional investments in real estate are mandated by constancy of ....

Demand and Long Term Performance: Real Estate is a simple (although not always “easy”) business, with a continuing and universal demand for its use.  People need a place to live, work, eat, buy goods and services, educate and entertain themselves, even locate when they pass on! And this is another unique feature of Real Estate its ....

Flexibility of Use: Real Estate is re-cyclable! Industrial buildings become apartments or retail outlets, houses become sites for newer houses or other new developments, investment properties become homes (and vice versa) for owners and their families. The adaptability of real estate allows it to be a truly long term investment.  And all through the ownership period, real estate is something you can ....

See and Touch: Real estate is there. Unlike most other investments, real estate is not an abstraction, not something written on a piece of paper.  In a time when wealth and cash are merely electrons in a database, real estate is still something you can walk around on, bump into and show to the world.

Can you think of another investment that offers all of these features and benefits in one package? I can’t so that is why I have sold real estate since 1986 - I feel very good about dealing and working with the best!

Bob Bracken

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