Toronto Market Is CRASHING - Is it Time to Invest or Exit? - Ask An Expert
Tags: Toronto Housing Market and Investing
The Toronto Market is entering a recession which can cause a lot of questions from potential investors, first-time home buyers, and people looking to sell.
This week I sat down with Ken Tucker, from Dominion Lending who brings over 20 years of experience in the industry. Not only as a mortgage broker but as a real estate investor as well.
We talk about investing in real estate, what to look for in a property, and how to invest in a recession. We also give you creative solutions for getting into the market so let's dive in.
Real Estate Investors
According to the headlines, investors are exiting the market, but is this true? We actually find the opposite! Investors are actually doubling down because there is an opportunity again. Back at the beginning of the year homes were selling for over asking, there were bidding wars, and inventory was so low. Now we have more inventory, we have time to do our due diligence, and prices are going down. So why would investors be existing?
True investors are looking at the numbers they're focused on the fundamentals, and they are going to find some amazing opportunities.
So what are some fundamentals that you should be looking for? It's important to make sure that you have a good economical opportunity. There have to be enough businesses to sustain local growth, public transportation, and enough jobs so people can stay in the area in a down economy. It's also very important that the property has cash flow, you want to make sure the property is good not only in great times but also right now in a more challenging time. If you're buying when the numbers work and it's a good investment then you don't need to worry about what will happen in the future. At the end of the day, the real estate rule is location, location, location.
My belief is always the best time to buy was 20 years ago, but the next best time is right now. When you look traditionally real estate has been a very solid investment. It's an investment because it's a necessity of life. People need shelter and there's a shortage of shelter, we cannot produce homes as fast as people are coming in. So when you're on the end of being the person to buy that home and to be able to offer a home to be rented out to someone else, it's a huge opportunity.
Now let's talk about first-time home buyers.There's a little more of a challenge right now when it comes to first-time home buyers. We have to be realistic that it is tough and it's tough for a lot of people. Most people's income is not going up the same way as prices, interest rates, and everything else. We are fortunate that prices have come down quite a bit on homes right now, which makes it a little more affordable from a price standpoint, but the cost is still high because interest rates are actually a lot higher.
So what can you do? Get creative. People have to unite their resources, maybe an opportunity is for them to actually have two families living together so that they can get in the market. People may buy rental properties or buy a unit that they can live in one unit and supplement their cost of living with a second unit. Or people may want to buy outside the area where they live right now, go to a more rural area, especially if you are working remotely. Another option is to buy an investment property outside of the charter in an area at the price that you can afford that will give you positive cash flow of three, five, seven hundred per month. Which does two things, you can either use that money to repeat the mortgage or pay down the mortgage so you can build the net equity. When the time is right, you can either sell the property, you can refinance the property and buy a property in Toronto or it can use the positive cash flow to rent the place that you want and pay down your living expenses. Either way it supports your lifestyle and makes life easier.
To own a home will take some sacrifice and it isn't just in this market. You ask clients that are 70, 60, or 50, no matter what age group, when people are buying their first home it tends to be a challenge. If you wait to get into the market, you will always be trying to catch up. Catching up to the inflation, to rising prices, to life's effects. What's interesting is this, any client that I brought into a townhouse it was easier for them to move into a detached or semi-detached later on. But you know, it's very difficult when you're starting out to jump into a detached home it's better to get used to progression. It's not a race, it's not a sprint it's a marathon.
If you have any questions, give Ken a call 416 855-4656, he'll be happy to answer any questions you have regarding financing, but more so he can prepare you for achieving your dreams from a point of arranging mortgages. If you're looking for creative solution for cash flow and opportunities or getting yourself into your first property or up sizing or downsizing give my team a call because it's more than just buying or selling, it's about building your lifestyle, and there are right solutions for doing so.
If you would like to watch the whole episode you can do so here https://youtu.be/F1rM4-BrgY0