We are all feeling the pain of inflation these days. From exorbitant costs at the grocery store to the sting of outrageous prices at the gas pumps, it seems like everything is getting more expensive by the minute. You may feel fortunate to have reached a place of financial stability in your life. Yes, high prices are painful, but you’ve spent a lifetime setting money aside and investing here and there whenever you could.  

You may, however, be concerned about what will happen to future generations. Those concerns are legitimate. Even professional couples with dual incomes struggle to afford rising rent costs, never mind buying a house in this market. 

During times like these, thinking about the future is even more critical. Creating generational wealth means that your children and grandchildren have the best shot at life, no matter what happens in the world or to the economy. And real estate is one of the best ways to make this happen. You don’t have to be a sharpshooter or tycoon to benefit from long-term equity gains and passive income. Often, there are opportunities within your own home that you haven’t even begun to realize.

Real Estate Investing Starts at Home

The possibilities within your own primary residence are almost endless. For example, is there a basement or attic that you could renovate into a secondary suite? You might even consider constructing an entirely separate unit if your lot size allows. If your home has access to a laneway, these are called laneway houses. If not, they are called garden suites, and they are quickly growing in popularity as the demand for housing in Toronto reaches an all-time high. 

Where does the money come from to take care of all of this construction? If you have owned your home for any length of time, you have almost certainly built up a healthy amount of equity you can use to reinvest back into your house.

Curious about secondary suites and laneway houses? You may also be interested in our article, “Do Laneway Houses Add Value To Your Midtown Home?“

The Benefits of Real Estate Investing

Building secondary suites and other home improvements are among the most popular reasons to borrow against equity because the benefits are twofold.

  1. The resale value of your house rises dramatically when it offers income potential. You may go into debt in the short term, but the long-term equity gains are well worthwhile.
  2. Once you find a tenant, you’ll generate passive income every month. This income allows you to hold onto the property for as long as you want, possibly even to bequeath it to a child or grandchild.

Alternatively, you can have a family member or relative move into the secondary suite, which again offers multiple advantages:

  • With completely separate units, you can both enjoy absolute privacy and independence without ever being alone. 
  • You can generate income even if you charge at or under market value for your unit, and your family member gets an affordable place to live, allowing them to save for their own future.

Of course, you don’t have to build a secondary suite to capitalize on your existing house. The solution can be even more simple than that. Do you have an extra bedroom or two that are sitting empty or only being used for storage? Why not clean them out and rent them to a student? This provides monthly income with almost no cost or time-consuming renovations to turn your house into an investment.

Ready to Level Up Your Investments?

The next step as a real estate investor is to purchase a second income property. You can start small with a one or two bedroom condo near a school that will instantly be in high demand. Or you can go big with a duplex or triplex that multiplies your earning power even more. Your decision is based on how much equity you have and how much financing you can obtain. Your willingness to maintain a second property and handle the responsibilities as a landlord also plays a part.

How can you fund the purchase of a second property in Toronto? Once again, it all comes down to how much equity you have. If you have owned a house in the city even for a few years, you likely have more purchasing power than you realize. Here’s an example of how the financing might work.

In 2018, the average selling price of a Toronto house was $787,300. By mid-2023, it had risen to $1.2 million. And keep in mind that your equity is not just what you paid for the house. It is what it is worth today. 

Had you purchased a house in 2018, your average purchasing power would have risen by $412,700 ($1,200,00-787,300). That second investment property may be more accessible than you have ever thought possible!

What if you want to enjoy all of the benefits that accompany investing in real estate investing without any of the headaches or hassles of being a landlord? Many Toronto investors are doing just that by finding and purchasing a property and then handing it over to a property management team. Their job is to find and qualify tenants, handle disputes, and arrange for maintenance and repairs whenever issues arise. Your job is to enjoy the equity gains every time the house rises in value. For many people, the tradeoff is well worth it.

Many factors determine the success of a real estate investment, but a good location is the key. You can’t go wrong with a family-friendly neighbourhood. The following posts can help you narrow down your choices:

Creating a Successful Plan as an Investor

The purpose of this article isn’t to make investing sound easy but rather to open your eyes to possibilities you may not have otherwise considered. Successful investing doesn’t have to be complicated, but you do need a plan to keep you on track. Expert guidance from a local real estate team can also help you spot viable opportunities and avoid potential problem properties that end up being money pits. 

As real estate values and demand soar in Toronto, finding a property with the potential to generate positive or even neutral cash flow becomes more challenging. Here are a few things to watch out for:

  • A house with minor cosmetic issues that you can fix without investing vast sums of money. Many potential buyers are looking for an entirely move-in-ready home that requires no work. What they overlook can be the perfect opportunity for you.
  • A house or condo in a previously “undesirable” area that is now up and coming. If your timing is right, this is a fantastic chance to buy an undervalued property that quickly rises in value.
  • A property in a neighbourhood close to transit, schools and other amenities. This type of opportunity might be few and far between, but it can happen if you are prepared to act quickly.

When considering an investment property, it’s essential to run the numbers carefully to ensure your projected income will be enough to cover the monthly costs. 

If the thought of real estate investing appeals to you, expert guidance can help you be more successful. Here’s How To Find The Best Midtown Real Estate Team.

A Strategy Is as Unique as You

Every investor has different priorities and goals. Some are looking for simple ways to get started. Others want to dive in and buy as many income properties as they can reasonably afford. Whatever your goals are, it’s essential to work with a local expert who can help you minimize the risks while earning the highest return possible. 

For the best results, plan for the long term. Real estate values rise over time. The longer you hold a property, the more it grows in value and the more financially secure you and your future generations can become. 

Do you have questions about the many opportunities Toronto offers to real estate investors at all levels? We are happy to show you the unlimited possibilities that await you. Reach out to us at david@batorigroup.com, bobby@batorigroup.com or call (416) 485-7575 for more information or to start the search for your next property.