| Oct 06, 2020
How to Make a Wise Property Investment in the Greater Toronto Area?
Real estate is how many of the world’s richest people made their money. It’s also how many “average Joes” boost their income, pay off their mortgages faster and finance their retirement. Real estate in the Greater Toronto Area has experienced a steady incline in property values, setting new records a number of times over the past few years, making it a tough nut to crack for those just entering the property market. However, if you already own property in the GTA, barring any major unforeseen circumstances, all you have to do is sit back and watch your equity grow.
In theory, between the time you buy your home and the time you sell it, it will hopefully increase in value enough to make your initial investment (and all that waiting time) worthwhile. Some people see huge returns, while others are left scratching their heads and wondering, “What happened?” The ROI you’ll see on your property depends on a number of factors. Here are three important factors to look-for in a high-return property.
What’s the most important factor in any real estate investment? A great location has always topped the list among homebuyers, renters and investors, for good reason. This is one thing you can’t change about a home – you can’t renovate a bad location! Location also impacts a number of other important factors, such as access to employment, shopping and services, main traffic arteries and highways, public transit, parks, community centres, etc. The more boxes you can check off on your “liveability” list, the better in terms of investment value – both for resale value, and rentability of your property if you choose to seek a tenant. Location is, and always will be, the most important factor to consider.
Tip: Dig into the area before you buy a property there. What is the vacancy rate? What is the employment rate? Is local land zoned for any undesirables (like a garbage dump)? Does the municipality have any development plans in the works? All of these factors may positively or negatively affect the property value.
Unlike the location, the property itself is something that you can control. Again, your intended use of the property will dictate your requirements. If you’re buying the place as a principal residence, your lifestyle is key. How many people live in the house, and how much space (read: bathrooms!) will you need to accommodate everyone comfortably? Do you work from home? Do you host overnight guests? The home will either have to meet those needs, or you’ll have to renovate. Take this into consideration when determining how much you’re willing to spend.
Renovating is a great way to achieve your dream home in your preferred neighbourhood. If you’re in it for the long haul, the years that you own the property, combined with some smart upgrades, are the key to maximizing your ROI. Here are some things to consider when updating and upgrading your home:
1. Keep renovations in line with existing homes in the neighbourhood. While you want your property to stand out in the market, you don’t want it to stick out like a sore thumb. You’re unlikely to sell a monster mansion in a bungalow community popular among first-time buyers. Enough said.
2. Be practical. Sure, some people might consider gold toilets to be a cool feature, but realistically speaking, buyers are unlikely to pay more to have this in their home. Keep an eye on the listings, and have your real estate agent to a comparative market analysis. This will provide valuable insight that could inform your own strategic renovation plans.
3. Stay on budget, and keep your eyes on the prize. If you’ve ever undergone a home renovation, you know things can quickly spiral out of control. Communicate with your designer and contractor throughout the process, to ensure they will stay on budget and on time.
Investing in real estate has paid off for many, and that’s one reason it continues to be in such high demand in Toronto. As Mark Twin famously (and wisely!) said, “Buy land. They’re not making any more.”