Real Estate Investing

Moving Up in Real Estate

By October 25, 2018February 13th, 2019No Comments
Moving Up in Real Estate

Loving real estate is easy.

From sipping wine and watching Netflix, to opening Christmas presents with the kids; the comforts of home are recognized by us all.

The feeling you get when you get to sleep in your own bed after being away probably has more to do with being home than the bed itself. We find comfort in where we live. Let’s face it; “home sick” isn’t an exaggeration. From family traditions to making memories, home is where we create many of our special memories.

So why do I keep pushing goodness to the side and bringing up the investment part?

Everyone must think I’m a cold-hearted business man. I’m all heart, I can assure you, and as I write this article I think of all the special memories I’ve made in my own home.

But, after investing in real estate for 24 years, I am very aware of not only my fondest memories for where I live, but the outstanding investment in the homes I’ve lived in.

While I have been investing in real estate for all those years

in the hopes of creating a balanced portfolio, I have also tried other forms of gaining a return on my money.

There is no sugar coating it. Nothing comes close.

When I factor in that my house is one of the few investments I can have that’s tax free, it’s a stratospheric difference.

I work with many different clients, and often clients selling at the retirement age…

It’s amazing how many people have the majority of their net worth tied up in their principle residence, which couldn’t be in a better spot. It’s a completely insulated tax shelter.

But did they make the most of it? Did they live in a home just below what they really wanted so they could match their company RRSP investment program ?Maybe they always wanted a pool but never had one because the fear of being “mortgage poor”. Let’s face it, we all have financial restrictions for what we can and can’t afford.

However, I think we all know we probably waste a little too much money here and there that could likely make up the difference from going from one house to another. Not to mention over time your house value rises (always has), therefore you are creating a larger tax free return.

Think about this for a second:

Guelph has historically been a city you can count on for a return on investment in real estate. Yearly appreciation in home values have averaged at 7.23% a year over the last 10 years (see table below) in detached homes.

To make things easier and to use a whole number let’s just play with this scenario: using a 5% appreciation this year, the numbers below are the tax free income essentially being built into your equity in the home:

500,000- 25k

600,000- 30k

700,000- 35k

Going into a 700k home saves the owner 35k a year tax free. Let me ask you this; how many people can save 35k a year? Tax free?

It impossible. So many people are in such a hurry to pay down their mortgage because that is the true way to get wealthy and to not have debt, and in doing so they live below their comfort level for this goal, while in the meantime they limit the compounding properties of owning a better home, and getting more enjoyment out of the place they spend most of their time in.

A home doesn’t have to be big to be special, but you cannot ignore the importance of the investment.

Make smart decisions with your money, protect your family and make the most out of what you have, but look deep into the numbers.


Buying the house you want, may not be risky at all, in fact it may be the best investment you ever made.