Worried about never being able to afford a home in Toronto? Check out some of these buying strategies that can help get you on the property ladder without being house rich and cash poor!
The CBC recently aired a segment on the increasing price of Canadian real estate and how home buyers are employing creative buying strategies to afford a home in Canada's most expensive markets. Other than profiling a developer in Vancouver that is building homes with mortgage helper basement apartments, there wasn't much more offered in the way of "creative buying strategies". So in addition to what the CBC report mentioned, here's a few ideas worth considering when buying in an expensive real estate market:
1. The Basement Apartment: Having a rentable basement apartment is one of the best ways to help with the expenses of home ownership. Whether you decide to have a tenant or not, having the option is golden, especially once interest rates start to rise and you want to have extra room in your monthly budget. If a house doesn't have a basement apartment, then look for a home with the potential for one. This would include having a separate entrance and good ceiling height. If it already has a bathroom this would be a bonus. If there's no separate entrance, then be aware that the cost to excavate and put one in could be around $5000+.
2. Get a Friend: One trend I've noticed more and more of is joint purchases between friends and siblings. Buying a duplex, splitting the costs and sharing the house between two units gives each person their own private living space and someone to share expenses with. The condo version of this would be to buy a unit with at least two bedrooms and if you're not purchasing with someone else, rent out the second bedroom to subsidize your costs.
3. Buy Small(er): When thinking about the type of home you want, think about how much space you really need. A larger house will tend to be more expensive (location aside) and have higher maintenance and utility costs, while a smaller home is more likely to come with smaller bills
4. Get in Before Everyone Else Does: Identify neighbourhoods that are on the verge of a renaissance (sorry...I really wanted to use that word). These are the areas where you'll get more bang for your buck, and when you go to sell and the neighbourhood has emerged, you stand to have a nice chunk of cash to move up on the property ladder with.
5. Buy with the Future in Mind: On average people move every 5 - 7 years. Who knows what the price of a home will be then, so consider buying a home that would allow you to build an extension or increase the liveable square footage and give you the room you'll need in the future. Harder to do with a condo, so consider looking at older buildings which tend to have a better price per/square foot where you can get a bigger unit for a cheaper price.
If you have any creative ideas for affording a home in Toronto, share them in the comments below