Those who have connected to chat about business know that OA is keenly watching the economic drivers that COVID has highlighted and those that it has disrupted. On top of our Real Estate businesses, we dabble in stock options trading, metals, small ventures and private lending. These vehicles hold fantastic opportunities to build your wealth, but they also come with historic levels of risk at the moment, due to the volatility in the markets and uncertainty of restrictions in the commercial sector.
As such, I was going to write a more investor heavy article this month, however a few days ago TRREB released the Market Stats for Toronto’s home sales in June 2020; you can view them HERE, to help understand why I shifted gears. It’s important to note that this trend isn’t just specific to Toronto’s market but these increases are being seen all over our busy region (The Greater Golden Horseshoe.)
So instead of diving deep or discussing alternatives, I’ve decided to “zoom out” a little bit and touch on the fundamentals (and MAGIC) of simply owning a home or rental property; Our Bread and Butter. These hard assets are the best hedge against uncertainty, volatile stocks, and the looming inflation coming down the line.
For basically the last 10 years, Real Estate has been my major focus and driver. We’ve purchased multiple properties, moved a dozen times, and took jobs in other places because of Real Estate. It is now my career, as a Realtor and RE investor. It hasn’t always been easy, but it has allowed me to provide for my family, build for our future and it’s also taught me to be a provider of safe, clean housing to others.
A lot of investors get caught up in the latest “cool things” and forget about time tested, boring real estate. We forget the economic benefits and that Real Estate has been the best place to grow a personal fortune, while positively impacting our well-being. Have you spent much time in your home lately; I bet you have!
For baby boomers at the age of 30, the cost of living was 36% of their income; Gen X at 30, it was 41%; for Millennials it is 45%. What else do we know? Wages continue to grow, but rents are growing more quickly.
Currently there are over 100 cities in the US and Canada where it is more expensive to rent a “first-time buyer” home than it is to own a first-time buyer home. We believe that everyone’s goal should be to purchase real estate, not only rent it. But remember, this purchase could also be a home in another town that you in turn rent to qualified tenants and then have this property pay you to live how/where you’d like.
A recent client of ours rents an apartment in expensive Toronto. They wanted to get into the real estate market but didn’t want to leave the City they love. So they purchased an investment property for $350,000 in early 2019. They put in 20% ($70K) and bought their first home as a rental property in Peterborough. They were nervous and at the time thought the $270K mortgage might become overwhelming…
Well, guess what, 14 months later, the Peterborough market is thriving (see the STATS here) and my clients have had quality tenants the whole time. The property not only covers all of its own expenses, it also covers $700/mnth of their Toronto rent! Now they are looking to refinance so they can purchase their second property. They’ve created a new income stream (that didn’t get affected by Covid!), have built incredible equity, and gained invaluable financial confidence.
That last part is the key: gaining confidence. They set a goal, learned along the way and can now do it again! As Brian Buffini says, “Owning a home is one of the best feelings ever. It can’t be described in words, it can’t be quantified in money. Home ownership is a feeling that makes life’s daily grind worth facing.”
I genuinely hope this is viewed as encouragement, and not boasting; Real estate has been very, very good to me. It changed my whole world and it continues to change my family, my clients’ and my friends’ lives.
Yes, it costs money; It may take saving, striving, some sweat and it’s rarely glamorous. It may not happen this year or next. But with careful planning and a few private struggles, it can change your life too.
Don’t get trapped looking at shiny objects or speculating on the hot new stock. Get started; Buy real estate, hold it and then buy some more. It’s not about timing the market, its about time IN the market.
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Stay sane, stay ready and start planning now for whatever comes next! |