Decide what’s worth fixing — because some budget-priced homes are worth the effort
McConnell found a home that isn’t even worth renovating. She called it “a literal teardown” that “has to be destroyed.”
Even if the land is valuable, there are some things that just aren’t worth the additional work — or the mounting costs.
Being wary of where you put your money is the key to making a good investment rather than throwing good money after bad.
A budget-priced home can be a stepping-stone into a hot housing market
“The reality is we wouldn’t have gotten into the market otherwise,” explained Pavlena Brown to The Star newspaper about their ‘original condition,’ 115-year-old-home she purchased. The home came with outdated knob and tube wiring, a very dated floor plan and single-pane windows that needed to be replaced, just to name a few substantial costs that Brown assumed after purchasing the property.
So why bother? Because the home was a solid 2,800 square feet house in a good neighbourhood, at a steal of a price that was well below the $1 million mark. For Brown, this added up to a deal.
“We were OK with opening up walls and finding a can of worms,” Brown explained. So when they found pipes that weren’t installed properly, compromising the structure of the house, they were prepared both emotionally and financially to absorb the work and cost.
How much home can you afford?
Whether you're hunting for a new home or looking to refinance your mortgage, knowing how much your new loan might cost you is critical. Use our handy mortgage calculator to help you understand what your payments could look like.
Get StartedYour home is an investment — or is it?
The reality is that many people see homeownership as an investment, and it is, but at what cost? With earnings not keeping up with house price increases, the window of affordability and the ability to get into the market is closing more with each passing day.
The desire for housing prices to increase, for homeowners, is squeezing many would-be buyers entirely out of the market. Investors in the Canadian real estate market are making the problem significantly worse.
According to the Bank of Canada, 30% of home purchases in the first quarter of 2023 were completed by investors — not millennials looking to break into the housing market. In fact, the same report found the percentage of first-time homebuyers dropped this first quarter to 43%. Turns out the housing market is being held up by investors — not bouyed by first-time home buyers.
Robert Hogue, assistant chief economist at RBC, told the CBC that a big portion of these investors are people who move into new properties and keep their existing home as an investment property.
"They're not like active investors. They're just looking at the market, they're looking at how quickly home prices are going up. Everyone sees housing as a decent investment, so everyone's mindset is: Why should I sell it?" he said.
It’s a fair question for people who, first and foremost, see homes as an investment. The flip side of that coin is, people who see houses as homes but can’t get into one because of a lack of supply.
Do you actually need to buy a home?
If you don’t have the money to buy a new home — or the patience to fix up an old one — you can still invest in real estate.
A great way to do this is by investing in real estate investment trusts (REITs). Not only are they beginner-friendly, it’s also possible to invest small amounts of money.
It essentially gives you exposure to real estate without having to actually own (and manage) the property. You won't have to pick up the rent or wake up to a plumbing emergency in the middle of the night, but you’ll reap the benefits of commercial and residential properties.
Just like any stock, your shares increase in value, or you get dividends, depending on the REIT you invest in. It’s an easy and affordable way to start your real estate portfolio.
— with files from Leslie Kennedy
sources
2. Trading Economics: Canada Average House Prices
3. The Star: Can buying a fixer-upper enable you to enter the housing market? (Dec 9, 2023)
4. CBC: The dirty secret of the housing crisis? Homeowners like high prices (April 2024)
Sponsored
You're 5 minutes away from the best mortgage
Searching for your perfect mortgage shouldn’t be hard. Homewise is an online brokerage that will negotiate on your behalf with more than 30 big banks and other lenders, completely free, and it only takes five minutes to apply.
If you're in the market for a new mortgage, or if you're looking to refinance before interest rates rise again, go to Homewise now and answer a few simple questions to get started.
