What’s Your Goal in Real Estate in 2021?

Starting of 2021, what’s your GOAL in real estate?

Depending on where you are in your real estate investing stages, your goal could be more or less focusing on 3 aspects: 

1 staple long-term capital appreciation hedge against inflation 

2 wealth transfer between generations - intergenerational wealth transfer

3 Passive income replacement of my active job during my retirement years 

Over the past 7 years trading as full-time real estate agent, I’ve helped hundreds of clients to fulfill their earl estate investment goals — they all came to one destiny - wealth accumulation though real estate.

Be mindful that real estate planning is like all other investment tools, your priority might change depends your life stage or financial situation.

Let’s Take a look at a few of my clients’ case studies:

1.       long term appreciation and tax shelter 

Toronto real estate is historically proven to be a stable investment against inflation. Let’s take a look in the below charts to see how much is your real estate worth in 5,10 and 15 years.

Let’s say you bought a freehold property for 1 million dollars today and with a mortgage amortization of 25 years, let’s say use conservative rate of 5% year over year application, that’s equivalent to 3 per cent after adjustment of inflation.

Here is the value of how much it worth over 10 years $ 1,628,895. It doubles the investment around 15th year, and it worth $2,653,298 over 20 years. 

As top taxed county, that there are not much tax shelter for any investment types. There is one exemption: there is NO capital gain for your primary residence.

https://whichrealestateagent.com.au/value/future-home-value-capital-growth-calculator/

I would suggest you planning to stay at your place for more than 5 years and you have the means to afford real estate it’s totally worth to purchase your home financially to shelter the after tax income.

2.       Generational wealth transfer 

Some parents trying to pass on their after-tax money to next generations by helping them put down payment for them or putting down deposit for Pre- construction condo. 

Ever wondering how do average people in Toronto could afford real estate. The truth is more and more people turn to mommy and daddy bank to borrow for down payment for their house. 

According to 2018 Stats Can, 40% first time home Buyer in Toronto are under age 35. A good example of investing a downtown condo while the kids got enrolled in UofT, Ryerson or OCADs in Toronto. By start early, they are far advanced in life than rest if their

There is another example as international wealth transfer.

In Toronto, more than 50% of children were not born in Canada, we all come from somewhere else except for the Native people. Especially today’s immigrants are coming with money from their native country to purchase real estate to off set potential political risk and safer better life . 

I had been to the first Canada immigration office called Canadian Museum of Immigration at Pier 21 to learn about Canadian immigration history. For the first half of the last century , it’s all European farmers to escape from the harsh worked war and poverty to explore the new world. 

It’s been dramatically changed since the day air flight industry booming in the 1970’s, nowadays People are coming to Canada are highly skilled workers to bring Wealth and knowledge. 

It’s not surprising that new immigrants to purchase house in the suburb or international student to buy a condo around UT . Our real estate market is safe haven in global money market.

3.       Built up passive income 

Hearing the phrase: make money while you sleep?

Lots of my clients are planning in replacing their active income (salary / wages and bonuses) after retirement with rental passive income.

    What is passive income? 

    Short answer: you’re not trading your time for money.

The beauty of real estate, there are three streams of income that you generate your incomes from investing estate.

l   capital appreciation, 

l   principle paying down

l   rental incomes 

My personal goal is built up a portfolio that completely cover my living expenses for the retirements while not keep my principal appreciation over the long term.

I’ll use myself for the show case.

I started investing in triplex when I was 27, secured the mortgage for 25 years while tenants help me pay down my principle. I’m getting a free and clear house when I’m turning 51. Along the way because I invested in the up-and-coming area, both property value and rents kept appreciated more than average rate, it doubled its value at year 7, I refinanced my property to put down deposit to purchase construction condo.

People always ask me how do you know how many properties do you need to get retired comfortably? Here is how I do the math: 

If I’m anticipating spending 10K per month then I would have to make 14k per month for the gross rental income collected minus about 30% cost for management, maintenance, property tax, insurance and utilities.

Everyone have different goals in life? What’s yours real estate financial goal  to achieve in 2021 ? In next 5 years or for life?

Please contact me and let’s chat if you find this article useful, Let me grow your wealth through real estate!