Pros - With as little as a 5% down payment, you can locate an investment property which will carry itself. For example, if you purchased a duplex for $250,000 with a minimum $12,500 down payment (5%), plus 5,000 for closing costs, the monthly carrying costs (mortgage, taxes, and insurance) will be approximately $1700/month. It would be a reasonable expectation to attain $2,000 per month in rental income. You would then have an investment in real estate which historically has always yielded healthy positive returns, being paid off by your tenants.

Let's do the math. If the property appreciated at a conservative rate of 3% per annum, in 10 years the real estate holding would be worth $335,979 and in 15 years it would have a value of $389,492.

What if you paid your mortgage biweekly and took other measures to pay off your mortgage quickly (let's say 15 years). You would own an asset free and clear that would have a value of almost one third of a million dollars and it would be generating you a gross monthly revenue of $2692.00 (assuming an annual rent increase of 2%).

All achieved with an investment of $17,500. Maximum returns with minimal risks.

What an excellent retirement vehicle, you can create your own pension by having two or more investment properties plus at the same time build a significant level of equity.

Cons - Bad tenants!!! Most of the tenant problems can be eliminated by proper initial screening and in many circumstances we can find properties that are already tenanted. If the tenant has a good credit rating, stable employment and good references, this is usually a good indicator that he/she will be a dependable and reliable tenant.

Another concern is assessing the potential for the property to sit vacant. We are fortunate in the G.T.A. and surrounding areas because we have a very low vacancy rate. Properties for the most part get rented out in a very quick time frame.

Lastly, an important consideration is the tenant's wear and tear on the property. If a fixture breaks (for example, an appliance) or if there is a plumbing issue, you, the owner will be responsible for addressing the problem. Of course, if it is a newer property, chances are not too much will go wrong.
What if you bought a property and real estate prices stayed flat for an indefinite period of time. You would still have an asset which was being paid off by your tenant and it still would represent a sizeable equity position for you in the long run.

Conclusion - With the returns being offered by the banks and the uncertainty of the stock market, real estate investments have continued to be an attractive, very safe alternative. You will prosper immensely by incorporating real estate in your investment portfolio. Remember, this is not a get rich quick scheme, but if you exercise patience, over time it will enable you to become a financially independent individual.

P.S. Ask me about "lease to own" options!