The recent interest rate increases and tougher stress tests when applying for a mortgage may have made it harder for millennial buyers to acquire property, but property ownership still remains the dream of many homebuyers or real estate investors. Either way, owning real estate is certainly one of the best ways to invest in your future whereby the investment risk is rather low. The catch is that real estate investments require time, patience and a lot of money before they start to payoff. The initial costs like the mortgage, taxes, fees, etc., can be intimidating, but once you create a financial plan, it will become much easier. Here are some of the benefits you get to enjoy as a property owner.
Building equity means acquiring more of the property with every mortgage payment. For example, if you buy a $500,000 home and pay off $300,000, you’d own equity worth $300,000, and you’d only have $200,000 more to go to close the mortgage and become debt-free. Plus, properties appreciate over time, which means it will be worth more than you initially paid for giving you the opportunity to sell for more in 10 or 15 or 20 years.
Having equity by the time you retire can be a true lifesaver in the old days. Most retired persons sell their big home, buy a smaller one and keep the rest of the money in their bank account which enables them a care-free retirement with enough to cover for any expenses that may arise. Can you imagine being as renter at the age of 70 with a modest retirement income?
Real Estate For Investment Purposes
Becoming a landlord in the GTA is certainly a way of earning an extra income given the strong rental market in the area. You will be able to use the rent money to cover for the mortgage, at least partially depending on the rent amount, but generally speaking, rents in the GTA are among the highest in the country.
Real Estate Appreciation Over Time
Real estate prices keep climbing which indicates how fast properties appreciate, and even if there is a drop, the market usually recovers quickly. This means that waiting for the market to depreciate and land a home for a bargain price might be a far-fetched plan. That’s why it’s better to buy sooner than later to make use of the generally low interest rates we have now before they climb again. Bear also in mind that new builds appreciate a lot faster and can generate higher returns.
Even if the real estate market can be volatile and has its ups and downs, the GTA area has been known for an upward trend regarding home prices, which means that the risk of investment loss is very low. The prices are expected to go further up in the coming years which makes your odds look promising. Real estate was and always will be one of the safest investment opportunities whether you are looking for a home, rental income or a property to sell in a few years. Just remember that the property needs to be in solid condition and that it needs time to appreciate in value. If you want to know more about property investments contact me here.