Motivation to Build Your Portfolio Through Real Estate Investing

Motivation to Build Your Portfolio Through Real Estate Investing

By Condo Culture

It can be challenging to figure out how to best invest your hard-earned money. You want investments that offer a high potential ROI while minimizing risk on the downside.

When evaluating your options, you may have noticed that the real estate market has exploded since early in the pandemic. Two average sale price stats that jump off the page between condos and townhomes within the regions of Waterloo and Wellington - an increase of $264K or 73.7% between December 2019 and December 2021*, and $100K of that was between June 2021 and December 2021 alone.

There are several reasons why we anticipate local real estate to keep generating great returns moving forward:

  • Lack of supply - Kitchener - Waterloo is one of Canada’s fastest-growing regions and housing demand has significantly outpaced supply. With inventory hitting all time lows, we’ve seen intense bidding wars where several homes up for sale have seen 30+ offers. The market ultimately dictates what a property is worth, and we have witnessed places selling for more than $300K over listing price as a result. The Birches, for example, has 2,500+ potential buyers already expressing interest in their development, and there are only 84 pre-construction townhouse condos available for purchase.
  • Demand is growing - It was evident early on in the pandemic that people needed more space if working from home was going to be a long-term reality. We have seen a significant influx of people coming from Toronto and the GTA, and elsewhere, relocating to the Kitchener - Waterloo area to buy larger condos and homes for their families. Demand locally is certainly growing in a hurry, and it’s also fueled by the federal government’s ongoing desire to bring more individuals and families to our beautiful country through progressive immigration initiatives.
  • A major city is emerging - The KW area is exploding in population growth and it’s heading towards becoming a substantial urban presence in the decades ahead. Between 2021 and 2041, the region’s net population is expected to grow by 264,000 people or some 46%. The urban parts, in particular, are taking off and condo development is at the forefront of it all. Buyers and investors are now rushing in to be part of this rapid growth since prices are undoubtedly going up from here.
  • Low-interest rates - Banks and other lending institutions have been offering attractive mortgage rates for a while now, and homeowners are taking advantage. We keep hearing that the prime rate will be increasing over the course of 2022, so it has led to an urgency of buying and locking in low fixed rates.
  • Relatively affordable - At first glance, real estate prices may appear to be high in KW, but compared to Toronto’s, a city which is only an hour away, are on average, 60% of the cost locally while garnering 80% of the rental income.
  • More high-paying jobs - The technology industry is such a huge part of KW’s growing economy, and 1,500+ tech companies are now thriving in the area. A decent percentage of these jobs offer high salaries, so employees have significant income that they can invest in their homes. Many of these tech companies are based in urban locations, and the primary living option is condos, so this type of real estate is experiencing exceptional demand as a result.

__Pre-Construction Units Offer Superb Value __

The booming local resale market for condos has motivated lots of buyers and investors to look at more affordable options coming from pre-construction and assignment opportunities. With just 15% down over the course of a few months, you can buy a pre-construction condo and not have to pay anything further until your unit is ready for occupancy. During the construction phase it’s typical to see your condo appreciate in value side-by-side with the resale market. Plus, there are no bidding wars when it comes to pre-construction deals, so that’s a big positive for buyers trying to enter the market.

garment street-1

2022 should bring some of the best projects that we’ve seen in years and we are excited to introduce you to them! You can also find unique off market assignment listings at amazing projects such as 108 Garment Street Condos and 607 King Station Park here.

Real Estate vs. Stock Market

When most people think about investing, the first thing that comes to mind is the stock market. Real estate however, has the potential to provide huge returns on your investment. Key benefits of real estate investing include diversifying your portfolio, the potential for higher than average returns, and the ability to generate passive income through rental revenue.

In general, real estate has proven to be less volatile and delivered higher returns over the last decade and beyond. Be sure to take a look at our Why Real Estate over Stocks video which outlines three reasons why this asset class holds value for investors.

Real Estate investing also provides a number of unique benefits such as:

  • The power of leverage affords investors the ability to drive higher returns via borrowed funds. For example, a $75K deposit drives appreciation on a $500K property as compared to a $75K stock/equity investment driving appreciation on the $75K investment.
  • Passive monthly rental income that builds equity in your property and helps pay down your principal mortgage. This equity can also be used to purchase additional investment properties.
  • Tax Advantages - One example is the ability to deduct expenses associated with rental properties.

Condo investments really can provide an incredible ROI - this article looks at how a condo investor made $87,500 on a studio unit between 2018 and 2021. The investor made it happen in just three short years in collaboration with Condo Culture’s team of REALTOR®s and investment experts.

There’s lots to digest here, but are the gears starting to turn in your mind for how condo-related real estate can become a larger part of your overall portfolio? Fantastic! Our team has helped thousands of investors over the years to successfully invest in all types of condos in the resale, pre-construction, and assignment market, and we can help to guide your strategy also.

Connect with us now to have a friendly conversation about condo investing - we can walk you through the entire process from start to finish, and dive into the numbers so you can confidently decide if the fit is right for your investment philosophy.

**Stats obtained from ITSO Real Estate’s Matrix portal between December 2019 and December 2021 within the Waterloo region and Wellington region. *

Share This Post