Millennials may have it harder to buy a home today than their parents had, given that the market prices have increased immensely marginalizing today’s buyers. Still, owning a home or an investment property is a dream many hold on to, despite the recent challenges like interest rate increases or the stricter mortgage stress tests.
Millennials should definitely try to overcome all the bumps in the road to become homeowners or real estate investors because there’s barely anything as safe as real estate when it comes to future financial planning. The multiple benefits of investing in real estate may not be visible at first given that the initial costs are big, like the mortgage, closing costs and property taxes, but with time, real estate investors/property owners get to enjoy the benefits of buying a house/condo/townhouse. Whether it’s for investment purposes or buying a home for yourself, any kind of real estate ownership pays off with rarely a risk associated with it. The only catch is that it takes time to get there. Let’s take a closer look at what real estate ownership can guarantee you.
Buying Vs. Renting
Renting is a convenient short-term alternative and should only be regarded as a transitioning step until you have saved up enough money for a down payment. Renting basically means paying off the landlord’s mortgage and building their equity instead of your own. Rent increases are also a challenge tenants face constantly, and above all, they cannot hope to see any return on the money they give away. Renting is an unnecessary expenditure in the long run, plus, tenants don’t have the liberty to update the place without the landlord’s consent.
Equity
Equity would be one of the main reasons you should invest. Building equity means acquiring the property as you pay off the mortgage bit by bit. For example, if you buy a $400,000 home and pay off $250,000, you’d own equity worth $250,000. You’d have $150,000 left to reach the finish line and close the mortgage. You’d be eventually debt-free and own a valuable asset (that probably will have increased in value over the years) that you could monetize any time you want.
Buying a home when young comes in handy when you reach retirement. The mortgage costs will be already behind you and you will be mortgage-free in your old days. Imagine having to pay rent from the modest retirement paycheck one day? Homeowners don’t have to worry about it as their real estate equity enables them a care-free retirement. If they decide to sell their home and downsize, they’ll have plenty of money left in the bank account that can serve as a back-up for anything they may need or want.
Real Estate Appreciates Over Time
It’s known that real estate prices increase over time, which means it’s better to buy sooner than later. The mortgage rates have gone up recently, but they are still generally low in Canada, so why not jump at the opportunity and use it to your advantage before another increase wave? If you want to buy a property only to sell it, you’ll have to be patient and wait for several years for the property to appreciate to gain profit (probably more than three years, depending on the location).
Buying Real Estate As An Investment
Toronto expects a population growth in the coming years which means that the rental market will keep being strong. You can use this opportunity to generate income by becoming a landlord. The rent money can partially or fully cover your monthly mortgage payments or serve as an additional income.
It seems that you cannot go wrong with owning real estate, especially in Toronto, as it only produces positive financial results in the long run. Whether you buy a home for yourself and your family, or for profit or to earn a side income, you will always end up having more at the end than when investing in other commodities.
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William Chan
Salesperson
647-896-8939
yourgtahomes.ca