Investing in Real Estate can bring great wealth and financial freedom if done right and with a plan. Historically, Real Estate has been the best place to invest and has made more money for people than any other investment.
My clients often ask me when is the right time to get into the market. I always suggest that you get in as soon as possible as the real big gains are seen over time. I have one client who has been tempting to make a purchase since 2006. The loft he was interested in had a value back then of $420,000. That same loft sold in early 2015 for $800,000. The value of the unit almost doubled in less than 10 years. This client continues to pay rent and has yet to make a move. A costly mistake!!!
The key is to start saving by setting aside as much as you can in order to make the down payment. The minimum for a first time buyer is 5% so a $300,000 property would need $15,000. By purchasing your first unit, you build wealth by paying yourself first through mortgage payments. Instead of paying rent, you are bringing down the amount you owe while the property value appreciates over time. In a few years, you may be able to take equity out of the property to buy your 2nd property in which you can now rent out and have your tenant pay down the mortgage. This cycle continues by saving and buying more properties. Once you have accumulated enough properties to meet your goal, you continue to pay off the mortgages until your are left with positive cash flows that then acts as your monthly income. Your net worth has then grown by the total market value of your real estate portfolio.
Concerns have always risen about the values of real estate and whether we have formed a bubble that is about to burst. I can tell you first hand that I have been dealing with this topic for the past 10 years and do not think we have a bubble. Luckily in Toronto, we have a very healthy market due to strong demand. We continue to have strong economic growth with a rising population. The demographics have changed as living in the city and condo life is becoming the norm of Toronto as people want to commute less and spend more time enjoying life. The low interest rates are also helping demand as it increases affordability and the ability to pay down mortgages quicker.
I have helped many of my clients build their real estate portfolios and have started so many on the property ladder. For any questions or more information on how to get started and what type of properties to invest in, please contact me at anytime. Reza Afshar 416.888.7367
