Why The Wealthy Are Heavily Focused on Real Estate

According to a recent survey conducted in the fourth quarter of 2015 by Tiger 21, its members were becoming careful about the Canadian real estate market yet they still on average put 27 per cent of their investment into real estate, the largest portion of their allocations.

Tiger 21 is an ultra high net worth peer-to-peer network for North American investors who have a minimum of $10 million to invest and want to manage their wealth carefully.

The next largest investment Tiger 21 members were investing in include public equities (23 per cent) and private equity (22 per cent) and smaller percentages going to fixed income, foreign currencies, cash and miscellaneous investments.

According to Darren Coleman, senior vice president and portfolio manager at Raymond James Ltd., in Toronto, a North America's leading full-service investment firm, real estate is very popular because investors can actually see and touch their investment.

In his experience, real-estate investors seem to behave with more logic than those who focus on markets. “For example, if you own a rental condo, and the one across the hall goes on sale for 30 per cent less than you think it’s worth, you wouldn’t automatically put yours on the market and sell, too, because you think there is a problem. Indeed, you may actually buy the other condo,” he says.

Darren also stated that real estate allows for considerable leverage, where banks love to lend against it and over time, this allows an individual to own a property with a much smaller investment than if they had to buy all of it at once.

According to Mr. Jochlin, an investment advisor, timing is key. He mentioned that no one wants to chase the performance of a hot real estate market as buying at highs will drastically reduce the overall return on investment. Mr. Jochlin said there are several factors to consider before investing in real estate such as whether an investment objective is short or longer-term, liquidity requirements and targeted return.

Reference: The Globe and Mail

http://www.theglobeandmail.com/…/why-the-w…/article28789073/