How Investing In Real Estate Can Make Your Retirement Dreams Become Reality

Dated: November 8 2021

Views: 205

Over the last 18 months, the value of real estate in Southwestern Ontario has increased exponentially. This probably has a lot of people really putting some serious thought into whether real estate would be a great long-term investment and how it could impact their retirement plans. Well let’s break it down.. 

 

(PS the short answer is “IT WILL” and “DO IT!” but let’s talk about why..)

 

Let’s do a quick rewind back to November 2011: The average home price in London at that time was $244,656. Imagine you purchased a home that year, and paid the average price in the city at the time. The land your home is sitting on would have more than doubled in value by now and in some cases even tripled if you bought in a sought after neighbourhood.  (Keeping in mind, over the last 18 months, housing prices have soared to new heights, so this won’t necessarily be the case over every 10 year period. But we’re living in unprecedented times so let’s roll with it). 

 

Break that down further: 

 

Say you are buying a home for $600,000 in 2021 (average home price in London Ontario as of August 2021 is $616,852), with an interest rate of 2.4% over a 25 year mortgage. 

 

https://itools-ioutils.fcac-acfc.gc.ca/MC-CH/MCCalc-CHCalc-eng.aspx

Even if we see only a modest 4% increase, year over year in the future, after 10 years your home would be worth roughly $888,000 and your mortgage balance will be approximately $395,000. 

 

You’ll have about $495,000 in equity (assuming you haven’t completed any major renovations that would substantially increase the value of your home over this 10 year period). 

 

Not bad right? 

 

With so many Canadians unable to put money away for retirement or getting a late start to plumping up their RRSPs, focusing on your real estate investment is a great option towards saving for your future. 

 

Stay tuned for next week's blog post where we will discuss purchasing a 2nd, 3rd, or 4th property, how to finance it, the tax implications involved, and how you can further grow your portfolio to set yourself up for an early retirement. 

 

Thinking about buying in the next few months? Want to know more about investments or the process of investing in real estate? Want to read over a free copy of my First Time Home Buyers guide? Or just want to chat about what's happening in the real estate market these

days? I'm always available to chat!

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