When looking for an easy way to make money, real estate investment should be at the front of your mind. Investing in a vacation property, a rental, or a primary residence, is considered passive income because it requires less time to manage than a 9-5 job. Unfortunately, the barriers to entry are high. Investing in real estate has become popular and, thus, increasingly expensive. In 2000, the cost to buy a home in the Greater Toronto was around $351,575 and today, it costs almost $900,000. This explosion of prices makes it imperative that you save for investments, but how much?
We recommend saving 20% of the total investment at a minimum if you are purchasing a single-family property as an investment.
Why? Mortgage Insurance.
According to The Canada Mortgage and Housing Corporation (CMHC), “If you want to buy a home with a down payment of less than 20%, you’ll need mortgage loan insurance. This protects your lender in case you can’t make your payments.” (https://www.cmhc-schl.gc.ca) The insurance can add anywhere from 2.8% to 4.0% of your mortgage to your monthly payments. We find 20% to be a good gauge on whether you have saved enough to afford the property, as well as a good saving to your monthly payment.
But, wait! There's more!
If you are looking to purchase a multi-family property, the CHMC focus "on your overall net worth; particularly the value of your liquid assets (i.e. your RRSP or non-registered investments, stock and bond portfolios, equity in other real estate and cash.) (reincanada.com)
But, before you feel downtrodden, there's still more!
Whether you are considering purchasing a multi-family property or are concerned about coming up with 20% for a single-family investment, there is one other option: You Could Become an Investment Partner.
At Regalway Homes, we not only coach first-time investors but we also partner on sound investments. By partnering with Regalway, you get the obvious financial benefits and a team of experienced investors that can help guide or advise you on the best investment for you at this moment in time.
Book a consultation with us today to see what steps you should take next in your real estate investment journey: https://www.regalwayhomes.com/bookings-checkout/real-estate-investment/book
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