I have a great idea. I think you should buy a rental property in 2025. This blog post may help you retire much more comfortably than if you had not read it. 

I bought my first rental property when I was 24. It was a 3-bedroom condo at Mclaughlin Square, and it came with a tenant. I ended up renting the unit before selling it 2 years later. My downpayment in three short years increased by 470%. After selling, I took that return and purchased a home with a basement apartment. 

It is easy to look back at how the Real Estate market has increased over the past few decades and think that it cannot keep increasing. However, I reflect back on when I started my career in the 1980s and in my 2nd year in business, I had a woman in her thirties who was desperate to purchase a home comment, “If I don’t buy now, I will never be able to afford a home.” If I remember correctly, she bought a semi-detached home in Bowmanville for around $70,000. The last home sold on the same street was for $680,000. Homes will continue to rise.

The average price for a bungalow with an accessory apartment in Oshawa currently is $850,000. Lenders will look at 20% as the lowest downpayment, which totals $170,000. Very few people could come up with this large amount of money. However, if a Buyer owns their own home, there is the possibility of increasing the mortgage on their principal residence to raise the funds for a down payment. If a person increases their mortgage to use as a downpayment, the interest on this increased mortgage becomes tax deductible. 

With the purchase of a duplex for $850,000 and 20% as a downpayment, the carrying costs (mortgage and taxes) would be around $4,350 and the expected rent would be approximately $4,300. The only out-of-pocket expenses would be the increase in the mortgage on the principal residence of $1,000 per month.

The upsides are depending on your personal tax bracket, about a third of this $1,000 per month cost would be recovered on your taxes, and in the event we saw a small increase of 4% in property values a year over the first 5-year mortgage term the home value would be approximately $1,035,000! This would mean your downpayment would have doubled in 5 years, and not only that, the $170,000 taken out on your principal residence for the down payment would have been paid down by $20,000, increasing your total return to $205,000.

Owning rental properties has been a proven long-term investment strategy that thousands of people have used to build their net worth. Given that the median average of 65-year-old Canadians at retirement have saved between $125,000 – $150,000, investing in a rental property for only 5 years would return more than what most Canadians retire on.

The first step is to meet with an experienced real estate broker and an accountant to go through the steps to understand how becoming a real estate investor will help you secure your future. The rest will just flow, like rent, into your bank account.

If you have any questions,  I can be reached at lindsay@buyselllove.ca or 905-743-5555.Connect with us on Facebook, Instagram, LinkedIn and YouTube.