Utilizing Upsizing as an Investment Strategy!
The real estate market in the Greater Toronto Area has been a bit of a roller coaster since the start of 2023 — ballooning interest rates and lingering effects of the pandemic have resulted in a slow start, lower sale prices, and reduced purchasing power for potential homebuyers. However, the emerging buyer's market is unveiling new opportunities to be taken advantage of — upsizing as an investment strategy.
This involves making calculated investment arrangements by selling off assets that are in high demand, such as condo units or starter homes and replacing them with larger properties which are in relative low demand and therefore a better value for the money. When interest rates eventually subside, these assets will have a much greater appreciation and increasing your net-worth. Let’s have a closer look at the benefits for savvy investors.
The Benefits of Upsizing:
Traditional investing strategies such as stocks and bonds are completely reliant on the stock market or other external factors to determine your success whereas investing in real estate provides more control over your returns. When upsized properties appreciate in value, it is typically due to renovations or other improvements made by the owner, both directly and indirectly. Furthermore, investing in real estate allows you to benefit from tax breaks such as the capital gains tax and deferrals, and lets you borrow against these assets. Residential mortgages generally have lower rates and open up opportunities for leveraging funds at low interest rates.
With any type of investment comes risk:
—it is important that investors consider all potential scenarios before making a decision that could potentially have long-term impact on their finances. Although upsizing may seem like a great strategy for some, there is always the possibility that values can drop before they increase again. It is important to remember that larger homes often require more maintenance than smaller homes; ensure you have adequate funds set aside for any repair work that may need to be done down the road. Every situation is unique and requires careful consideration. Remember to weigh all options carefully before deciding what makes sense for your particular financial situation and goals!
With these tips in mind, you too can take advantage of this lucrative opportunity!