Why we chose real estate as an investment

So, now that we had made our decision to work on developing assets, we had to choose the type of assets we wanted to work on. Some examples of assets are: businesses, stocks, intellectual property, patents, real estate.

Businesses are an asset that we are very interested in because we both started as free-lancers and we are entrepreneurs. Actually, Fred has created his first business earlier this year and I am currently working on making my free-lancer activity grow and transform it into a business. We both enjoy working on our businesses, we create good value through the products and services we provide and it is just very rewarding to see the results coming in little by little. All in all, we like building things.

We are not too fond of stocks because you need a lot of knowledge to invest in stocks wisely. With the current crisis, we did invest a little money in some stocks (maybe Fred will write about this in a future post) but this is not our favorite investment and this is not really what we want to become experts at.

Intellectual and industrial property are good assets. Say you write a book, a song or you invent a product: you end up making money any time somebody buy your book or your product, or play your song on the radio. You write the book once, but your earn money for every item sold worldwide. This is a very good asset too. And Fred and I like sharing our knowledge (and also our lack of knowledge!!!) so this is a possibility.

But what seemed most interesting to Fred was real estate because he just enjoys the process of looking for a property, fixing it up and making it nice and useful for the renter. I must admit that I am not as enthusiastic as Fred about it, I don’t particularly enjoy doing those things but his excitement convinced me to go ahead.

At this point in the post, it might be necessary to explain what kind of money we expected to make with our investment in real estate. We weren’t interested in flipping the property (i.e buying it and hope it gains value to sell it for a better price and make money in the process). Flipping is just like trading in the stock market, and we are not especially interested in that type of gains (called capital gains). What we were planning to do was to buy a property, furnish it nicely and rent it. And this is the rent paid by the renter that would bring us money every month: this type of gain is called cash flow.