Is Real Estate a Good Investment?

Why Real Estate Still Shines

Ever notice how property talk never goes out of style? Even when stock markets wobble, there’s something reassuring about land and buildings. In Calgary, for example, average home prices climbed roughly 60% between 2015 and 2023—so in the internet they write, and local agents nod in agreement. You too feel bricks and mortar beat spreadsheets sometimes? Let’s dig into what makes real estate tick as an investment in 2024.

What Makes Real Estate Unique

Stocks and bonds are great, but real estate brings a few special perks:

• Ability to leverage other people’s money via low–cost mortgages
• Tax deductions on mortgage interest, property taxes, insurance, even depreciation
• Dual returns: monthly rental cash flow plus long–term capital gains

That combo—income plus equity—gives you both short-term spending power and long-term wealth building. Banks will often lend you 80% of a property’s value at rates hovering around 4–5%, meaning your $100,000 down payment can control $500,000 of real estate. Gains amplify, and yes, losses can too—so tread thoughtfully.

Current Canadian Market Snapshot

In 2023, rising interest rates and tighter mortgage rules cooled demand across Canada. But supply shortages remain stubborn, especially in cities like Toronto and Vancouver, keeping prices from tanking. Calgary saw modest dips last year but, in the internet they write, we’re poised for a 1–3% rebound in 2024 as the Bank of Canada hints at rate cuts. High immigration—around 400,000 newcomers in 2023—fuels demand for rentals and starter homes. So while lofty prices make headlines, underlying fundamentals still look solid.

Four Ways to Invest in Real Estate

There’s no one-size-fits-all approach. Here are the main options:

1. Direct Rental Ownership
   Buy a condo or duplex, rent it out, collect monthly income. Great for hands-on investors who don’t mind tenant calls at midnight.
2. House Flips
   Snatch up a fixer-upper, throw in renovations, then sell quickly for profit. High reward—and risk—like extreme sports for property buffs.
3. Private Syndications & Fractional Deals
   Pool $5,000–$25,000 with others to own a slice of large apartment buildings or development projects. Yields of 6–8% net are not unheard of, plus potential equity upside.
4. Public REITs/REOCs & ETFs
   Buy shares of Real Estate Investment Trusts or exchange-traded funds that hold property portfolios. Liquid and passive, but yields tend to hover around 3–5%.

REITs might grab headlines, but if you want higher yields and can handle longer lock-up periods, private deals or rentals often outperform.

Risks & How to Mitigate Them

Real estate isn’t a guaranteed gold mine. Here are some pitfalls—and simple hedges:

• Interest-Rate Risk: When rates spike, mortgage costs bite. Mitigate by locking in fixed-rate financing for 3–5 years.
• Policy Changes: Governments can impose foreign-buyer taxes or vacancy levies. Diversify across regions and asset classes to spread regulatory risk.
• Vacancy & Maintenance: Empty units and surprise repairs can drain cash flow. Always budget a 5–10% vacancy/maintenance reserve.
• Illiquidity: You can’t sell half a duplex if you need cash. Keep a separate emergency fund or line of credit for flexibility.

Plan for these scenarios, and you won’t be left scrambling when markets shift.

Sky Fort Case Study: The Thompson Family

Meet our fictional test case, the Thompsons—two working professionals in their early 30s. They started with $50,000 seed capital and wanted both income and some growth. Here’s their journey:

• Year One: Bought a $300,000 two-bedroom condo in Calgary’s inner city. Rented it out for $1,800/month, netting about $300 after mortgage, insurance, and condo fees.
• Year Two: Saw 5% property appreciation, sold at $315,000. Profit before tax: $15,000. Reinvested that into a small fix-and-flip.
• Year Three: Completed their first flip—bought a $250,000 bungalow, poured $30,000 into cosmetic renos, sold at $315,000 for roughly $35,000 profit.
• Outcome: Over three years, the Thompsons cleared around $55,000 in profits plus rental cash flow, reinvested gains into a fractional multifamily syndication that paid 7% annually.

Type of story where you think, wow, that’s doable with a plan.

Long-Term vs. Short-Term Strategies

If you crave stability, buy-and-hold rentals let compounding do its thing—mortgage pay-down and steady rent hikes build equity. If you itch for faster returns, flips deliver speed but demand more time, capital, and nerves of steel. A mixed approach hedges both ends: rentals anchor your portfolio while occasional flips boost liquidity.

High-Level Tax & Leverage Insights

Real estate’s tax perks are sweet: deduct mortgage interest, property taxes, insurance, and even condo fees against rental income. Depreciate the building value on paper to defer taxes further. When you eventually sell, capital gains tax applies only to half the profit—often a softer hit than full-rate income tax.

Leverage amplifies gains—use it wisely. A 20% down payment triggers CMHC insurance, so aim for 25% if you can. A 25-year amortization versus 30-year reduces total interest paid. Small shifts in mortgage terms can add thousands to your bottom line over decades.

Is Real Estate Right for You?

Real estate demands time, capital, and a dash of grit. Ask yourself:

• How hands-on do you want to be? Do you relish tenant chats or prefer a passive play?
• What’s your risk tolerance? Flips can skyrocket profits—or fall flat if markets turn.
• How long is your horizon? Shorter terms favour flips or syndications; longer holds suit rentals.

Your answers guide your choice.

Your 4-Step Action Plan

Ready to dive in? Here’s a simple roadmap:

1. Define your investment goal: cash flow vs. equity growth
2. Choose your primary vehicle: rental, flip, syndication, or REIT
3. Assemble your team: lender, real estate agent, property manager
4. Start small, track performance, and scale deliberately

Stick to this plan, tweak as you learn, and you won’t be left chasing trends.

Next Steps & Call to Action

Real estate remains one of Canada’s most enduring wealth-builders—if you treat it seriously. At Sky Fort, we’ve guided hundreds of Calgarians through their first deals, helped them dodge rookie errors, and build portfolios that feel as solid as the homes they own.

Want to see if real estate fits your financial roadmap? Book a free Sky Fort consultation today—no cost, no commitment. We’ll tailor a strategy around your goals, budget, and lifestyle, so you can invest with confidence (and maybe even crack a smile when you check your rent roll).

Click here to schedule your free session and let’s make your property dreams real. Because in real estate, fortune often favours the well-prepared.