Where to Find Opportunity in a Slow Market

Published on 7th February 2019

Regardless of whether we are in a buyer’s market, seller’s market, or balanced market, there is always opportunity to be had if you just look hard enough (I truly believe that). That’s why there are so many people who became super wealthy after the 2008 financial crisis. That’s why there are people who profit when the market changes. That’s why there are people who make a fortune in every market. You just need to know where to look.

What’s in Your Portfolio? Making money in today’s real estate market is not as easy as buying a property and hoping the appreciation will come in the next few years. Nobody is expecting that at this moment, or at least not based on the news headlines anyways.

In the past two weeks, I’ve had numerous calls from non-clients who are looking at what options they have for their portfolio. Fortunately, most of them are in a good position and have money to work with.

Oddly enough though, recently, there have been an influx of people inquiring about what to do with the pre-construction unit they originally bought for personal use but now need more space and are looking to sell their unit on the assignment market. Those people are sitting on a lot of equity! This is exactly where the opportunity lies. Anyone who bought a condo before 2017 is likely sitting on quite a bit of equity that has built up over the past two years.

The Perfect Storm – The current market is actually the perfect storm for anyone who is looking to upgrade from a condo to a freehold property right now. The condo prices and demand are about the highest they have ever been. On the flip side, the freehold demand is about the lowest they have ever been. The combination of these two factors results in the smallest gap in recent history from a condo to a freehold property.

This means that you can sell high on your condo and buy low on your freehold. This opportunity is especially great for people who live in a condo and could use some more space (i.e., for those who are thinking of kids or pets).

Wait a Minute Though – “Isn’t the current freehold market the worst it has ever been?” That’s exactly the point. It’s not about whether the market will go up or down that you need to worry about. It’s the difference in price between the asset class you own and the asset class you can upgrade to.

Land Ownership – Over the course of the past 10 years, I can without a doubt tell you that a freehold property will go up in price. We are running out of land to build on yet lots of people are making their way to the GTA. Now’s the time to own a piece of land (or two, three, whatever you can get) before it’s too late. If you can buy a freehold property at this moment, then you’re capitalizing on this opportunity and will be heftily rewarded in the next 10 years.

Determining Your Purchasing Power – So how do you know if you can capitalize on this opportunity? Well, the first thing you need to do is to determine what equity you have in your condo. Your equity is essentially what your property is worth less your total mortgage owed.

If you’re not sure what your property is worth, you can reach out to me for a free assessment. Contact Zhen @ 416-436-9436 or Zhen@PrimePropertiesTO.com.

Step 2 is to determine how much mortgage you qualify for.

As a result of the steps above, you will determine your total purchasing power, which is your equity plus your mortgage. Most of the time, that will give you a good idea of what kind of freehold property you could buy.

The Wrap – Most of the custom scenarios that I have assessed for my clients have allowed them to upgrade into the freehold property asset class quite easily. These current market conditions, where the gap between a condo and a freehold is the smallest it’s ever been, may not last that much longer. Once an increasing number of people start realizing freehold properties are priced less than its actual worth, these properties will be in demand again and prices will shoot back up again. It’s the Year of the Golden Pig and this is YOUR year of Golden Opportunity! Don’t miss out!

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