I just had a meeting with a good friend, and she was expressing how home prices rise so much over time that she has no idea how her kids are going to be able to afford a home in 10 years.
I get it.
The average price will be well over a million by then, and wages won’t increase as much in the mean time. For context, since 1998 wages have gone up 23% (it’s August 2023 as I write this), and the average house price in Ottawa has risen 350% in the same time period.
In other words – affordability as a ratio of income:house value has eroded tremendously.
So what’s the solution?
I know one… buy something for them NOW.
I have a handful of clients who have bought small investment properties over the years and have leveraged them into ’empires to be’ for their kids.
Here’s a case study:
Client/ good friend of mine bought a Triplex in a small town for 178k 9.5 years ago. The property just barely cash flowed and they slowly fixed it up over the years.
5 years ago they refinanced it and pulled out 90k and put 20% down on a SIXPLEX in another small town for 425k.
Their oldest daughter was 9 when they started.
Guess what phone call I got a few days ago?
Their mortgage on the 6plex is due in 6 months and they want to pull out 20% of the value of their NEXT multi unit and have their daughter (now 18) live in one of the units!
They will have over 10 units in as many years, have over 800k in equity in the 2 properties (will have about a million in the 3), have a home for their oldest child and have set them up for success.
The cost? They pulled out 40k when their mortgage on their principle redidence was due – and made a move.
10 units, 10 years, 1M equity.
They had the foresight to make this small move a decade ago, and the only regret they have is they didn’t start 10 years sooner.
If you’re curious to know how you can get started on the same path – just send me a message and ask. There are so many ways to rearrange mortgage debt, qualify for more, get creative private financing, or even build a plan that you can’t afford NOT to look into it.
In my opinion of course.
Hope to hear from you.
Best
The Evans Real Estate Group Blog 