The Greater Toronto area is one of the most active real estate markets in Canada, especially regarding the resale market. Many factors play a role, including the number of people living in the area and its proximity to other major cities.
But being so competitive comes with a risk or complexity. So is it easy to build equity through real estate or not? As the Equity Master, I know how to do it, and can help you do the same!
Equity Through Real Estate
What is Real Estate Equity?
Real estate equity refers to the value of a property established by the increased market value for a property. It is also referred to as capitalization, the profit derived from a real estate investment.
Real estate equity can be tangible or intangible, meaning that it can be in a physical form like land or money (purchase price). It can also be in an intangible form like annual leasing payments or potential cash flow.
For example, you own a rental property worth $200,000, and you owe $100,000 on the mortgage. Your equity is $100,000. If you then buy a second house worth $300,000 and finance it with another mortgage of $200,000, your equity would now be $300,000 - because you would need to sell your first home to pay off both mortgages.
Building Real Estate Equity
Property Updates
A well-maintained property is more likely to be rented quickly out to a new tenant and attract homebuyers.
Many homeowners are increasingly focusing their energy on cosmetic updating instead of renovating their homes. This means that the homeowner adds value directly to the property, immediately building equity in the house.
The main benefit of this approach is that it allows one to avoid costly renovations and make sure the home is more appealing and desirable for potential buyers.
Rentable Unit
Remodeling a space is an investment that can have lasting benefits. The investment in your home will help you add value to it, make it more functional, and increase the resale value of your property.
An income suite is a term for a space typically added to a property to create separation from the main living areas or provide additional income for the homeowner. It often includes one or more bedrooms, bathrooms, and kitchenette spaces. Some homeowners use this space as part of their rentable suite.
Curb Appeal
It's no secret that people care about their homes just as much as they care about themselves - and if you want to stay ahead in the competition, your property needs its security system and updated curb appeal.
Real estate is a competitive market, and if you want to find success in it, you have to be up to date with the latest trends.
When you Buy, Put More Down
From an investor standpoint, it's essential to understand how much equity you have. If you're looking for a rental property and have at least 20% down from the purchase price, you'll have more equity than someone who has only put 10% down on their property.
Buying a property with at least 20% down is the best way to ensure your future. It will give you the flexibility to sell or refinance before the term in a financial emergency.
If you’re interested in finding out how you can build your equity, contact me today and let’s discuss your unique situation and goals over a cup of coffee!
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