I. INTRODUCTION TO BUYING REAL ESTATE

People tend to invest their money in real estate and the stock market, both of which have their peaks and valleys. Of these two popular investments, real estate tends to dip for less time than it peaks; there are longer periods of sustained growth, shorter valleys, and over time, the trend is always upward.

Here are some things you should know about investing in real estate:

If you plan to live in your property for more than five years, you are in a great position. You will have the benefit of being able to ‘time the market’ and sell when it is to your advantage. In this case, your home is also a lot more than a tangible investment in your future – it is a place for you and your family to put down stable roots in the community, while enjoying and personalizing your living space.

If you have bought your property mainly to generate rental income, and do not ‘have’ to sell it at any specified time, you are similarly in a good position to gauge when prices have hit their peak so you can sell at the height of the sellers’ market. In the meantime, all that rental income is paying for the mortgage, repairs, and upkeep.

Remember, there are other important financial benefits to owning property:

• Tax benefits for improvements made to the property
• Government rebate programs for eco-friendly renovations
• Homeowners can use the equity in their homes as security for other loans
• Building equity in your first home puts you in a good position to trade up to bigger and better houses as your circumstances allow
• Mortgages on investment properties are tax-deductible

Of course before you begin your search, it is crucial to examine your own personal and financial circumstances to determine whether now is the right time for you.

Here are some key points to consider:

• What monthly payments (mortgage, taxes, utilities, etc.) can I afford?
• How much can I afford for my down payment?
• Do I have funds set aside for closing costs?
• Is my job stable?
• Are my needs (job change, starting a family, etc.) likely to change in the next 12-24 months?
• Do I have time and energy for this process? (looking for homes, notice given to landlord, baby on the way etc.)
• Do I have a home that I want to sell first?

Ideally, find out about your mortgage options before you start looking. There is nothing more frustrating than falling in love with a home, only to find out you cannot afford it. Pre-qualifying for a mortgage is the best way to discover how much you can afford. Your banker or financial planner will look at your income, expenses and debt to determine how much a lender will lend.