June 11, 2014 | Good to Know

The real estate market is difficult to figure out, especially for someone in their early 20s, but over the years, I’ve come to realize that there are definitely 5 things that I really wish I knew about real estate when I was in my 20s.

I went to University outside of Toronto (Wilfred Laurier University), so I did, of course, consider buying a house close to school, but I remember thinking that once I graduated, it would be a balance to manage home-ownership with the my serious desire to travel and explore the world, so I passed on it and figured I’d buy when I got back. But when I returned to Toronto at 22 years old after traveling for a couple years, I regretfully still didn’t buy a house. If only my older, 30 something-self could talk to my 20 something-self; here’s what I’d be sure to tell him about real estate:

1. Buy a house (in Toronto)!

Think you can’t afford it? Like they say: where there’s a will, there’s a way. Come up with just 5% to put down, and then you can rent out the rooms to your friends that are working those long hours in downtown offices; the house will only serve as a roof over-their-heads and a place for a quick breakfast before heading out to conquer the business world and an 80 hour work week. See? You can do it. If you’re a numbers person, and were to do some calculations, you’d see that if I put down that 15K (my 5% down payment on a 300K purchase price), rented the rooms out to my friends to cover all my costs (like mortgage payments, utilities, maintenance, insurance, etc), then my ROI, with a cash-on-cash return on date, considering today’s value, would’ve been something like 5300%! Wow!

2. Refinance your first purchase.

That way, you can buy a second place. It seems crazy to think about buying that much property at a young age, but think about it: you could buy another property, with 3 (or even more) units in it. In most cases, those 3 units will be able to cover the costs of the house. That way, you’d have scalability based on an initial investment of just 15K, with no money out of pocket.

3. Buy, and then hurry up and wait.

Did you know that on average, that land values in Toronto doubles every 12 years or so, all the way back since the Second World War (that was in the late 30s).

4. Find someone that knows more than you do.

Find someone that you can look up to as a mentor. Those types of positive role models are invaluable; they can calm your concerns and suggest the best time to leverage to buy more.

5. You can always rent… it out.

Think about renting out your house as an income generator to get some positive cash flow going. If you rent it for more than what you pay for it, you’ll be making money. You can live in a cheaper space while you’re pulling in easy money on your rental property.

If that’s not incentive, here’s some food-for-thought: Had I purchased some of those homes I was admiring in The Annex and Dufferin Grove in my early 20s (at a cost of just 300K – 400K back then), then right now, I’d be sitting on a house worth a cool 1.1-1.6 million dollars.

Above all, I’d tell my younger-self, don’t be scared to take risks, just make sure they’re calculated and thought-out. Real estate, at the end of the day, is always a good investment.

Have I got you thinking about it? Good! The first step is to contact me so we can get you started on the right path for real estate success (and so you can avoid thinking about telling your younger-self any of the 5 points above).

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