How NOT to Lose Big Money in GTA Real Estate

Real Estate is a hot topic.

Especially when you are as involved in real estate as we are, you find that it is constantly a topic of conversation, whether you intend to discuss it or not.

And – everyone you know is constantly sending you articles and comments (usually doom and gloom in nature).

Here are some of my favourites…….

“I think the market is OVER saturated – I am seeing so many signs for sale everywhere in my neighbourhood and none of them seem to be selling”.

“I hear that sales are down 35% – and it’s only going to get worse!”

and most recently, I was sent an article from MoneySense Magazine with the following headline:

How to Lose Big Money in Toronto Real Estate.

The gist of the article is that people who purchased properties at the peak of the market, often as speculative buyers who got caught up in bidding wars – well, the losses they faced were significant.

There is absolutely no denying that you can lose money in real estate – especially when you don’t know what you’re doing and are purely speculating (not to sound arrogant!)

But this is my honest opinion, we are sitting on a goldmine here in the Greater Toronto Area – we are literally in one of the hottest and most steady real estate markets in the world in my opinion.

And here is why:

Real Estate is a simple exercise of supply and demand.  The more demand, the hotter the supply – like any commodity.

Did you know that every year, Canada has an influx of approximately 300,000 immigrants, of which approximately 1/3 settle in the Greater Golden Horseshoe Area (spanning from about Niagara to Oshawa).

Currently this area houses about 9 million people – but the projections show that by the year 2041 (less than 25 years from now) the population will be approximately 13.5 million.

And for those of you who know the area, you know that we are surrounded by the Greenbelt and so extra land to develop more housing is slowly going to run out.

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We have, for the large part of our investing career, been concerned about investing in areas with strong economic fundamentals and growth.

And where the numbers make sense.

And to be honest – I believe that we are sitting on a goldmine.  By the time the year 2041 rolls around (23 years from now) – many of our properties will be paid off free and clear.

With the influx of immigration and the lack of land to develop, the real estate prices will continue to grow steadily over time.

And rental demand will be at an all time high – especially with the continued lack of affordability within the area (which is only going to get worse as prices rise).

I’m not saying that over the next 20ish years that the market won’t go through any cycles or varied growth, but at the end of the day the economics do speak for themselves.

We are the highest immigrant hub and are considered internationally to be one of the most desirable places to live.  That coupled with the obvious lack of land in the area (sandwiched between water and greenbelt) makes it fairly clear that our real estate will always be in increasing demand.

The key is to buy properties that make sense in terms of the numbers (rent can cover the carrying costs), have high rental demand and not based on future speculative growth (especially short term growth).

As I have said many times, real estate investing is a long term strategy.  We buy and hold and don’t plan to sell for the next 20+ years.

So until next time, happy Canadian Real Estate Investing.

Jose Jafferji, REIA

Your Real Estate Investment Advisor, Coach & Realtor

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