Buying a home is beneficial in more than one way, especially in a market like the one we have been experiencing in the Greater Toronto Area, and in most parts of the rest of Canada. It is important to 'get in the game' fast. I have always said, you have to play the game in order to score a goal. No one ever scored a goal while sitting on the sidelines and merely watching the game.
First time home buyers often get so focused in the property they want to live in that they don’t see the properties they can actually buy. We all have goals and aspirations but it is not always possible to get to the end goal straight away. There are so many baby-steps on the way. You may want to live near the Financial District in Toronto or the Entertainment District in downtown T.O.; however, the first step is to buy a condo in Scarborough to at least kick start some savings.
Stop paying that rent: Did you know that at today's mortgage rates, approximately every $500 you pay in rent pays off your landlord's mortgage of $100,000. So if you pay $2,000 in rent, you are paying off someone's $400,000 worth of mortgage. In two years of renting, that's $48,000 down the drain.
Get ahead of the curve: Real estate is getting expensive. Every year, prices go up by 6% to 8%, and even in double digits in some neighbourhoods. On a $400,000 property, that's $32,000 more each year. Now you can try and bridge that increase every year by just working harder or you can lock down a property using a small amount of money and let that property put you ahead by $32,000 each year by appreciation alone. Did you know that there are options available today that will allow you to lock down a $400,000 property for under $270 per month? I am reminded of a major bank's marketing slogan, "You are richer than you think".
Make it a Team Sport: I am sure everyone who has rented is familiar with the concept of renting a room in a house. In downtown Toronto. It is very common to see "condo mates", a.k.a. room mates. This is where two individuals get together and rent a 2 bedroom + 2 bathroom apartment, have a room and a bathroom exclusively for each of them. The common areas, like the living room and the kitchen, are in the common domain for both to enjoy equally. Why not apply this concept and buy instead of renting? In situations where you know that you are going to be in school or working for the next 2 to 3 years, you can easily buy with an arrangement in place on how and when to sell. There are options available and you should definitely explore them, specially if they will make you richer.
Give it thought and more importantly, don't let analysis paralysis get the best of you. Take action.
Formally educated as an Architect, Jagdeep Singh is Toronto REALTOR™ consulting on both resale real estate and new developments. Powerful Local Focus on Real Estate with a Global Perspective™. This post is for information purposes only. Though effort has been made to ensure the accuracy of the contents, the reader is advised to verify the information independently. This post may contain contain information that is privileged, confidential and exempt from disclosure under applicable law. The reader is not allowed to reproduce it in any medium without the author’s prior written permission. Jagdeep Singh is a broker with Century 21 Heritage Group Ltd., brokerage (416) 798-7133 which is independently owned and operated. This message is not intended to solicit parties currently under contract.