What Are We Doing?
Tags: Investment, Real Estate, Secondary Cities, Chad McMahon, Home Selling, Home Buying, Life planning
Well first off, I’m sorry but I have to say this. I just have to…
What the hell are we all doing? Even as a real estate agent this honestly doesn’t make a ton of sense and the more and more I think about it, I can’t really believe it’s taken me this long to snap out of it and look at things differently. Maybe it’s the bubble of my life that I’ve been in just focusing so much on my growing family, my profession, my clients and the ever changing housing market that I haven’t considered the bigger picture…everywhere else.
I’m aware this won’t apply to everyone and obviously not everyone will be in the same boat but hey, maybe take this as a sign that you don’t necessarily need to go down this road and maybe pull a 180 and do something completely different and take a leap of faith.
You don’t have to be like everyone else out there going through the day to day and follow the same path. Maybe take this as a chance to maybe re-adjust and carve your own path on your terms. Kind of feels good just to type that...My Terms!!
Now I’ve quickly daydreamed many of these different scenarios here but this is the first time that I’m strongly considering actually applying it to my life. I've realized helping others is great, but I need to implement this mentality myself.
I'm constantly reading the news and I analyze the numbers a lot and not just because it’s my job, but because I find it fascinating. Now my wife and I have been talking back and forth for a few years of moving and getting our forever home and then the market heated up and went crazy for a few years…like stupid crazy.
Now if you were a fortunate person and bought a home before 2013, you’ve likely made a rather decent penny on your investment up to now. Not only do you have equity but it has jumped up a rather good amount in the last 5 years since then. Even with the little bit the market has given back after the cool down.
My wife and I were fortunate as we purchased back in 2009 and our home has at least doubled in what we paid for it. We are sitting on a good chunk of equity here, the question is, what do we do with it? Is anyone else in this boat? Are you having a similar conversation? What is your next move?
Now we could be like many and sit on it and let it collect dust or maybe now is the time to put it to work for us. Many people are either unaware they can do this or don’t have the desire to take the risk. With the way the rental market is right now, why would you not want to take out some equity and get an income property to rent out?
The real question is which is the right way to do this? Which way will benefit me the most? What amount of risk do I want to take?
Now I was talking with another fellow agent that I really respect in my office earlier this week and we started chatting numbers and the market and that’s when I really started thinking hard about this after our conversation. Now the meat and potatoes of the conversation are just below.
So if you purchased a forever home or an investment property in a “secondary city” like Kingston you could get a 4 bed 3 bath room home for $450,000 or less. This house will rent out there for $2000 a month. You could buy the same house in say Meadowvale district in Mississauga for $850,000 and it would rent for $2400 a month. Doesn’t make much sense mathematically does it?
Think about this, if you bought a home in the GTA in the time listed above you likely have up to at least $400,000 in equity. If you sold your current home now you could move to a secondary city and own your current home outright and then take that equity out and buy another home and rent it out. You are now the owner of two properties instead of the one in the GTA. You are also mortgage free and have an additional $2000 coming into your pocket a month as well that is paying off the mortgage on your second home.
You can also pay 15% down on hour mortgage a year without penalty. If you did this for 5 straight years you’d own 75% of the second house (likely more). You’re also in a city that is expanding and the values of these homes are likely going to go up in value as well. You can take the equity out again and get a third property and just like that you have built equity and are collecting rent off two properties a month. One is paying you and the other is paying for the mortgage on the newest acquisition. You see where I’m going here…
Isn’t it crazy that there are options out there for so many that they just have to take a leap of faith and go on a bit of an adventure? A new area, a new home, a new job, new acquaintances, new adventures and best of all – you’re mortgage free (at the very least). There is less stress in your life and you have opened up your life to a world of options to make your families future better as well as your financial stability.
Keep in mind this is only one option. You could keep your place in the city and take out the equity there and buy a home in a secondary city such as Kingston, Hamilton, Guelph, Waterloo, or London.
This way you have a secondary property with lower mortgage payments but you are still building equity. Again all of these depend on your situation, the amount of equity, your age, your positions and your desire. I’d take the leap and relocate. I could own two properties somewhere else instead of one here. For further perspective let me put it this way, you could own two homes in Kingston for what one person is buying a two bed/two bath condo in the city of Toronto…that’s just crazy to me!!
So just what are we doing? Don’t you think this is nuts when you look at it like that? Imagine you want to downsize, what’s keeping you here? When you could greatly increase your quality of life by making an adventure of it and relocate to a smaller city. You’ll pad your bank account and be mortgage free.
Hey its food for thought, I wanted to open your eyes to it. Nothing good comes without some sacrifice, but there are many out there with opportunities to make their mark and get years ahead of where they could be. Thinking of downsizing? A newfound Empty Nester? Wanting an investment property or you just want a change of scenery? Want to get a pre-build home or condo and rent it out to leave for your kids down the road? These are just a few of the options.
I can show you how to make it a reality and how to build equity much faster. It's time to think outside the box and to not weigh yourself down with a huge mortgage. Avoid being house poor, there are always other ways and I want to help you find them. Thanks for reading, Chad