So I recently read an old CNBC interview where author David Bach states that “buying a home is an escalator to wealth”. David Bach has written many, many books on becoming a millionaire. I read the Automatic Millionaire many, many years ago and found it extremely helpful.
He states, “The average homeowner to this day is 38 times wealthier than a renter.”
I have a very similar opinion, my net worth has climbed because I got into the real estate market early and whenever I get the opportunity, I try to buy another property because I can see how it’s improving my net worth without a lot of effort on my part.
He points out that you still need a place to live and after the mortgage is paid off, you own a house. If you rent over your lifetime, you’re essentially left with nothing.
I do think in this real estate market you do have to get creative, given the high prices.
- Can you take money out of your RRSP?
- Can you get help from a parent or family member?
- Can you combine forces and buy a property with a friend or family member?
- Can you speak to a financial planner about ways to save for a down payment?
- Can you get a side hustle to help you save faster?
- If it’s truly unrealistic for you to buy something in Toronto, then consider other areas:
- Can you buy the property in an area that allows Airbnbs so that you can make money while making use of the property on the weekends or during a few weeks?
- Can you buy the property in an area where you might eventually retire so after you rent it out, the mortgage will be paid off when you retire?
I think it’s important to exhaust every avenue possible to get into the market. I am lucky that my mother encouraged me to get into the market early but regret not buying more properties when I was younger. I just really had no idea the power of real estate back then. So I’m trying to save you from my mistake.
As they say hindsight is 20/20, and it truly is.
So what can you do to boost your wealth and ride that escalator to millionaire status if you already have a home? The Toronto market has been so successful that chances are if you purchased a property at least 3 years ago or earlier you can pull some equity out to buy another property.
How do most real estate investors, myself included, build their portfolios?
When the value of their property is high, they speak with the bank or a mortgage broker and get their property appraised so they can use some of the equity they have built up as a down payment on their investment property.
David Bach finishes the interview with this statement, “The fact is, you aren’t really in the game of building wealth until you own some real estate”.
So if you really want to get into real estate, whether that’s buying your first property to live in or your first investment property, let’s chat.
I have 4 properties under my belt and have seen what real estate has done to my own wealth so I’d love to help anyone get a leg up onto the property ladder. I can introduce you to a mortgage broker so let’s get started.