Getting started with real estate is one of the best things you can do for your financial future.
With the price of real estate skyrocketing over the past few years, even in spite of recent lulls, you may be wondering, how to get started with real estate.
It’s no secret or surprise that the real estate market in the Greater Toronto Area can prove to be challenging, time-consuming and even downright frustrating. There is strong competition and low supply so sometimes, you even have to navigate the intricacies of various strategies just to get your offer noticed.
Now, if you’re at this stage, you’re already one step ahead of where I’d like to start this discussion. If you’re a young professional or couple trying to learn how to get started with real estate, the state of the market may seem overwhelming.
The reality is that your very first real estate purchase is unlikely to be your dream home. You need to consider what you can afford right now which may mean starting off in a condo, a townhouse or a smaller home than you see yourself in down the road.
Figuring out how to climb the property ladder effectively so you can achieve your real estate goals long term can be greatly supporting by working with an experienced REALTOR®.
Naturally, one of the biggest barriers one faces when they are getting starting with real estate is budget. It’s important to keep in mind that the total you are approved for isn’t necessarily an accurate reflection of what you should spend. After you factor in closing costs, taxes, and utilities along with transportation, food and living expenses, you could find yourself house poor. And that is no way to live.
If you’ve saved up a comfortable downpayment and think you’re ready to get started with real estate, you may find yourself getting cold feet. Yes prices are high – but more than likely, they are only going to keep climbing higher. One of the biggest mistakes you can make at this crossroad is waiting for the market to drop.
The Toronto real estate market has seen fluctuations over the years, but they tend to be very small and over very extended periods of time. If you decide to wait, you could find yourself priced out of the market. Start where you are and use what you have. It’s truly the only way to start climbing the proverbial real estate ladder and start building equity that you can put towards a larger home later on.
Another concept you could be considering before getting started with real estate is waiting to save up for a bigger down payment so you can get closer to the type of property you really want. This strategy may only cost you more in the long run, especially since the Toronto real estate market tends to appreciate at a value of 10-20% per year.
It’s important to ask yourself if your ability to save money can potentially exceed this growth. If not, then don’t wait. For a great article on how to strengthen your offer when you do find a home you like, click here.
If you are dead set on a particular type of property and don’t have 20% down, this may not be the end of the world. There are lots of lenders who work with borrowers who put down less. This may mean you are subject to a CMHC fee, which is typically a small percentage of the loan and wrapped up into the mortgage, but it may help you get a little further ahead that much more quickly.
No matter what you decide to go ahead with, make sure you are setting some smart and realistic goals for yourself. Know that it is alright to start out small and improve along the way. Yes, most people would prefer to live in a detached home – but perhaps starting out in a semi-detached or a town could work for the next 5-10 years. Some of these properties also come with less overhead costs and maintenance so that may be a better option for where you’re at in life anyways.
In addition, if you can renovate throughout the period of time you own a property, that can further increase it’s value as time passes along with passive appreciate you’ll gain simply by owning in the meantime.
In keeping with being realistic, take an objective look at your current needs and set out some clear milestones. If you’re a single, young professional, chances are you do not need a large home. If you’re looking to start a family or already have one however, then that can change the amount of space you may need.
As noted above, the bigger the house you buy, the more costly maintenance will be. You need to factor in property taxes, utilities and general wear and tear on a property. As you’ll learn once you’re a homeowner, there is almost always something to fix at some point or another. Keep this in mind and plan on a financial buffer as you start to outline your list of needs and wants.
Your goal should be to get into the market, even if it means compromising on some of your long-term needs and wants. As long as you are getting started with real estate now, this gives you the best possible chance to climb the property ladder to get into your dream home later on.
For some information on first time home buyer programs, click here.
If you want to get started on finding your first home, contact me at 647.896.6584, by email at info@serenaholmesrealtor.com or fill out this super simple contact form. For lots of other great tips, make sure we’re connected on social and you’ve subscribed to my YouTube Channel.
Interested to see what’s on the market right now? Check out these listings.
Photo Credit for Feature Image – Truman Homes, Calgary
