The Wealth You Can Build Over Time From Real Estate

Real estate is one of the simplest ways to build wealth over time, you have the option to keep expanding and expanding. Patience is essentially the main thing that’s required of investors; we always preach the buy and hold strategy. We are a little biased as Toronto is our favourite place to invest, not just because we live and breathe this city, but we are constantly seeing the numbers go up steadily and strong in value. Canada is one of the safest places to invest, but there are strong opportunities across the globe. You will have to look at the precise market you wish to purchase in as not all locations are equal, there are even micro-markets with varying price factors in any city or town. Toronto is so especially appealing to us is because prices are consistently rising and the research dictates that it will continue to do so, but also due to it being more accessible than most markets. Flipping houses is a quick way to make money in this field, but the return on investment is substantially stronger if you play the waiting game. Real estate is not a get rich quick scheme, building wealth takes time; the longer you wait the more you will prosper.

The Toronto Real Estate Board (TREB) presents statistics of prices, solds, as well as new and available properties. They provide the information that analysts and realtors get their data for past and present values to understand trends and projections. In January of 1996, when TREB first began collecting real estate information, the average price of a home was $194,251 and now in November of 2019 we’re sitting at $843,647. In under 24 years, the values have more than quadrupled. Yes, that is quite a large amount of time, but it is a substantial amount of money that you are just comfortably waiting on to build. In the Greater Toronto Area, the price of an average home in November of 2016 was $777,091, in 2014 it was $577,386 and in 2009 prices were $416,713.We see these values strong as well across the majority of the States, especially in New York. If you look at prices for condos for each quarter in Manhattan there are consistently dramatic increases. The average price for the third quarter of 2019 was $1,654,000 while a decade ago the average price for a condo was $1,393,001. There was a massive dip in sales prices from Q2 to Q3, which was $2.389 million, a 31% dip. This is due to a large number of factors, including the season and sales volume. Losing money is a possibility in this market, but that depends on when you sell your property. You only lose money when you sell. 

What’s so appealing about real estate is the ability to refinance, utilize mortgages, and purchase more and more properties with the equity that is already building. Let’s say you buy 2 properties and get tenants to cover the mortgage costs, after 3 years you can pull equity from those properties to get 4 more, then repeat the process after another 3 years to get 8 more, and after another 3 repeat that for 16 additional properties. In 12 years, you could have 30 properties which would be at a larger increase of today’s valuation of $843,647 (a current total value of $25,309,410), which would also continue to develop every year.

90% of millionaires across the globe have achieved their financial success through getting involved in real estate. Housing is one of the simplest ways to build wealth, it requires a large down payment and a significant degree of patience. Once you know where to put your money, it’s all about playing the waiting game.

Written by: Spencer Maxwell

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