With a 10-year home price doubling rate, it is clear that Toronto’s real estate market is blazing hot. One major factor which accounts for such a sharp upturn in the real estate market in Toronto is the massive immigration into Canada’s largest city.
This massive influx of immigrants into Canada; ranging between 240,000-320,000 yearly within the last decade with 30% of them coming to Toronto, has led to a certain predictability of Toronto’s real estate market. According to experts, the market is safe and this was amply depicted by home prices remaining relatively constant during the last recession in 2008.
Besides, there’s also a constant inflow of international students or international workers (with workers’ permit) into Toronto, and the establishment of the city as a safe haven for immigrants has certainly paid off in a thriving real estate market.
How can you Benefit from Toronto’s Thriving Real Estate Market?
Tax, tax, tax
If you’re an international buyer, the first thing you should consider is the foreign tax associated with your purchase. You can calculate this via the updated land transfer tax calculator.
As well, tax for foreign buyers who don’t plan to live in Ontario is pretty huge, at about 15%; however, you can get a rebate on this speculation tax if you work full-time in Canada for one year with a work permit, or if you become a permanent resident of Canada within four years after buying the property. There are other conditions that can get you a rebate.
Consider Investing in REITs
If you are unqualified for a tax rebate, you can choose to ignore Toronto’s real estate market. However, if you’re unwilling to forfeit the immense benefits associated with such a hot investment scene such as Toronto’s real estate market, another smart approach is to invest in REITs.
A Real Estate Investment Trust is a form of exchange traded real estate product that grants you access into Canadian real estate without you having to purchase the property you invest in.
The smart investor cashes into viable REIT options such as the Dream Hard Asset Alternatives Trust (DRA.UN) traded on the Toronto Stock Exchange and focusing mainly on the Greater Toronto Area, and is able to gain maximum benefits of real estate investments without its’ typical burdens such as managing the property and screening potential tenants (for rental properties). What’s so genius about this option is that you can benefit from a REIT regardless of wherever in the world you choose to live!
Work with one of the Best Local Realtors
However, if your aim is to live in Toronto for at least a few years, plunging into the Toronto real estate market is likely to be very interesting, and worth it.
Don’t know how to navigate the potential ‘muddy waters’? No worries, all you need to do is work with one of the top realtors in Toronto.
Understand how Down payment/CMHC Insurance Works
It also helps if you understand how down payment works and the minimum amount to pay for it in Canada. While for instance, a 5% down payment for a property valued at $500,000 is acceptable, it is recommended to put down at least 20% down payment as a sign of commitment.
With the CMHC loan insurance, you can get a mortgage for up to 95% of your home’s purchase price at a fair interest rate, irrespective of a small down payment. Hence, a proper understanding of how CMHC Insurance works would be extremely helpful to your real estate investment. Also a smart investor always shop around to get the best mortgage rate in Canada.
Conclusion
The real estate market in Canada has been a hotbed for over a decade, but a shabby understanding of how best to invest can put you in the red rather fast! Thus, mapping out an investment strategy- whether you choose to invest in a REIT or to plunge into the thriving market headlong- is an amazing way to keep your head above water, and gain maximal returns.
