Profits From Appreciation

Profits From Appreciation

Since the sale price of your home is negotiated before you move into the property, any increase in value above that amount will mean that your equity is increasing in your rent to own home. In other words, if your future price is set at $280,000 however, the homes in your area are now selling for $300,000, you get the property for the $280,000 that was agreed to at the beginning of the term. Not bad at all.

Rent To Own Profits From Appreciation
Rent To Own Profits From Appreciation

Now the most common question that we get is, ‘what if the price of the home goes down?’ Yes, that can happen, however you have a few choices to select from;

1. Make up the difference and have the property transferred into your name
2. Negotiate a new buyout price with your seller
3. Re-negotiate your contract at a new sale price at a new future date and continue to restore your credit and earn more monthly credits
4. Or simply move out. Remember it’s an option, not an obligation to purchase the home. Similar to leasing a car when your term has expired.

Remember, a home will continue to appreciate in value over the long term, unlike your car. Like Mark Twain said, “buy land, they aren’t making any more of it”. Another key factor to remember is that the value of homes can fluctuate and nobody has a crystal ball, however, by moving to areas with strong economic fundamentals will help protect you from any major bubbles.

Another key factor to remember is that there are close to 100,000 people come to the GTA every year. I don’t know about you but that’s a lot of people, meaning more homes that will be required. In fact, with that many people, you will need at least 60,000 new homes each year to keep up with the demand. If you want a great chart to show where the bulk of people are migrating to, check this site out. Like I’ve said before, there is a huge demand for the Courtice.
Great places to invest.

Not only do you have new immigrants moving to the GTA, you also have the Millennials.

Who are the Millennial’s you might be asking…. well you have heard of the baby boomers from 1946 – 1964, over 80 million strong. The millennials are just as strong, born between 1980 – 1995 and there are approx. 75 million of them. Guess what… they are starting to look for homes too and rapidly taking over from the baby boomers who are pushing 60 and looking to downsize. meaning more families looking for starter homes as well.

With all these new families looking for homes, this will continue to keep the prices of homes on an upward trend at a nice an easy pace. One last important fact to remember is that income growth has outstripped house price growth over the last 10 years. This is a direct result of the low-interest rates that we continue to see and I believe we will see for years to come.

With all that being said, at the end of the day, the best place to put your money in is Real Estate. If you are renting it’s time to stop and look at your options at owning your very own home. If you have a small down payment and blemished credit there are options out there for you and your family

Written by Gary Hibbert – Real Estate Investment Advisor –

Brian Donaldson

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