Is Buying a Home a Good Investment?

There is something to be said for ownership. The proud moment when you sign the papers, declaring that the keys to your new home are yours. Ownership is certainly a pride and joy, but it is also a privilege.
In today’s world, renting and leasing are common. Whether this is a monthly lease payment to a landlord, a car payment to a dealership, or a monthly subscription to access your favourite TV shows no longer offered on cable television.

When someone who is currently renting asks us if owning a home is a good investment? We often point out that home ownership puts you in the driver’s seat. Home ownership allows you to take control of something that is rightfully yours.

Studying in Guelph? Discover the perks of buying a house as a student.

Take Control of Your Life (and Finances)

When you move through life in the passenger seat, you are subject to the driver’s directions. Take this metaphor and apply it to renting– at the simplest level, the landlord has the authority over the property and you… are simply along for the ride. When you invest in real estate, you become the owner of tangible property and the rights associated with it. Suddenly, you are in the driver’s seat, making the decisions and reaping the benefits (if you make them wisely).

Can I Afford to Buy a House?

To determine if home ownership is right for you, start by speaking to a qualified Mortgage Agent. The personal variables affecting your ability to purchase a home include debts/ ongoing payments you carry, your current occupation and salary, your overall job security, and your current living situation (family vs couple vs bachelor). Your mortgage broker will review your financial situation and provide expert financial advice.

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Use the First Time Home Savings Account

First-time buyers have a multitude of financial programs available to them. The First Time Home Savings Account, or FHSA, is the best tax-free program available when you begin saving for your down payment.
This account allows you to store away up to $8,000 a year and any withdrawals from the account are *tax free*.

Second, the Home Buyers Plan is ideal for those interested in withdrawing from their RRSPs for a down payment. Through the HBP, withdrawals of upto $60,000 can be made, allowing couples to withdraw up to $120,000. If this amount is repaid over 15 years, the entire process can be tax-free.

Connect With a Professional

Your next step, as you explore whether investing in a home is the right purchase for you, is to speak with a Real Estate Agent. Your Realtor is like a human GPS for homeownership. When you find yourself not quite knowing where to begin, this is where our agents at Capstone come in and help.

One of the ways we assist our first-time buyers is by making the process “less stressful”. When you are unsure where to start, we’ll help you find the right community at the right price point so you can make a smart, sustainable investment.

Buy With the Right Realtor

Everyone knows a friend of a friend or a family member who works in Real Estate. The bigger question is: Do they have the experience to help you make the right investment in the Guelph market?

David and Michael, our CapstoneREPS, have extensive backgrounds in property management, student income rentals, and own multiple investment properties. When you work with an expert who has been in the same situation as you, you get results that are based on firsthand experience.

After all, would you rather buy a car because it was recommended to you by a family member or choose the right car, recommended by the expert salesman? When weighing the odds of who to work with, consider the risks and potential rewards of putting your investment in the right hands.

How Real Estate Appreciates Over Time

Real estate builds wealth through two primary avenues: equity and appreciation.
Appreciation is the overall increase of your property’s value year over year and is affected by the market conditions, demand, ongoing construction and expansion, and area demographics. Historically, real estate in strong-growth communities like Guelph has shown consistent appreciation. Let’s look at a recent example:

Appreciation in Action

We successfully helped one of our Buyer clients purchase a home on Scottsdale Drive in Guelph for just over $350,000. The home has 7 bedrooms and includes a basement apartment. Right out of the gate, our Buyer used a purchase-plus-improvement mortgage strategy, which covered the entire cost of the basement apartment renovation.

The client was able to obtain renters for all the rooms in the first month of ownership. A few years later, our client leveraged the equity to purchase another property and still maintains a cash-flow basis to this day. The property is now valued at over $900,000. When you choose to work with Capstone, we look forward to the future and see the long-term potential in your home investment.

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How Equity Works

Equity pay down occurs as your mortgage balance decreases with each payment. You own more of your assets in the process and continue to build a strong financial rapport. The combination of equity and appreciation allows homeowners to build net worth through real estate.

The example we provided shows how one of our clients leveraged their mortgage to increase the value of their investment property by renovating the basement apartment, which has gone on to significantly increase the value of their home.

Breaking Down the Logistics

Looking into logistics, real estate is a smart investment when the market conditions are balanced. During the Pandemic, Guelph and its surrounding areas saw a record-breaking seller’s market, where homes were selling significantly above asking price, buyers were buying without conditions, and available inventory was limited.

When the market benefits sellers, it poses a risk for buyers seeking investments, as profitability is tight due to a lack of inventory and high demand. As our market shifts following the pandemic, Wellington County finds itself in a buyer’s market. There are a variety of options available for those looking, and with the right Realtor, there is room for conditional sales (home inspection, financing, due diligence, etc.) and negotiations.

The Current Market Conditions

We see the current market as one of the best opportunities for first-time buyers looking to invest in the Guelph area. Upon starting your home search, we will meet with you to assess your wants and needs. Then, your designated agent will compile a variety of properties for you to tour. From there, they will work to refine your search until we find you the house that feels like home.

Once negotiations and paperwork are complete, our back-end team will handle the paperwork, communications, and ongoing client-care. If you find yourself questioning whether buying a home is a good investment right now? Then consider the inventory available to you, the different financing options and incentives, and the peace-of-mind when working with the right Realtor.

A Real World Success Story

Here is what one of our previous clients is saying about Capstone’s help in purchasing their first home: “We recently bought our first home, thank you to Georgia Lavarini’s hard work and dedication. She was a pleasure to work with; super kind, patient, and very knowledgeable. She answered all our questions and provided resources and recommendations to ensure the process went smoothly.

She heard what we wanted and delivered! We are very happy with our experience and have already recommended Georgia to our family looking to buy/sell. Thank you again to Georgia and the Capstone team”.