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Investing In Real Estate as Part of Your Long-term Financial Plan



Investment experts may have strong opinions, but the one piece of investment advice that they all agree on is the value of starting early. How do you plan to save for retirement? Most people rely on RRSPs and TFSAs as a major part of their portfolio. While these are important components of a retirement plan, don’t underestimate the value of including real estate holdings.

 

Let’s say you are planning on retiring twenty years from now. During your golden years, you intend to downsize to a condo or low-maintenance townhome and spend more time traveling. Rather than wait two decades to find your ideal retirement home, you could choose one now, at today’s prices, and take advantage of the lowest interest rates we have ever had. The property can be rented out before you need it, but once the time is right, you can make it your home.

 

Here are three reasons to consider this real estate investment strategy:

 

Values continue to increase. Real estate prices are up nearly 9% over the last year according to the Toronto Real Estate Board. By buying your future home in today’s market, you could save thousands of dollars off the purchase price. If your retirement plans change before you occupy the home, you are still holding on to a valuable asset that you can continue to utilize as an investment property or sell to capitalize on the equity.

 

You can collect rent to pay down the mortgage. The Toronto rental market has high demand and rental rates for desirable properties. Why not take advantage of this lucrative opportunity by letting a rental income offset the cost of owning your future home. The more you pay your mortgage, the more income you will enjoy from your investment property. When it’s time to move in, your place will cost you significantly less than if you had waited until the “right” time to downsize.

 

The equity in your existing home will be freed up. Many seniors rely on the equity in their homes to cover their housing costs later in life. What if you could put yourself in a better position? By buying your retirement home now, you will be free to use your primary home’s equity as you choose later on in life – reinvest it, travel or spend more time enjoying the things you love.

 

 

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