Buying a condo home It's never too late to catch the Toronto condos wave.

According to David Bach in his book The Automatic Millionaire Homeowner (Canadian Edition), (and a book I hardily recommend you buy). "Nothing Beats Homeownership as a Route to Riches".

He goes on to say that "of all the secrets I can share with you, nothing beats homeownership...you will ultimately make more money on your home than on any other investment".

We know this to be true because for years they have been coming in to our storefront real estate office and telling us that buying a condo home is nuts.

Meanwhile our clients build up tidy sums of equity and the market leaves the doom and gloomers in the dust. Bach points out that with the exception of two downturns, real estate prices have been on the rise since the 1950's.

Four Things That Make Real Estate A Road to Wealth

He points out four factors that make buying a condo home a reliable road to wealth and four reasons real estate is a good long term bet to make you rich.

Recent studies show that renters have fallen far behind in net worth compared to house buyers who own their own condo or house.

A University of Toronto study found that homeowners had 29 times the net worth of renters in 1984 and by 1989 this increased to 70 times. Homeowners had an average net worth of $140,000 while tenants had $2,000.

Another study by CMHC, Canadian Mortgage and Housing concurred with this concluding the net worth of homeowners has increased far more rapidly than tenants since 1984.

My own experience with buying a condo home in Toronto is that since I bought my first home, values have tripled despite a couple of downturns.

Owning is Cheaper than Renting

"People who say it's cheaper to rent than buying a condo home are simply wrong" says Bach.

They may be right in the short term (and we know where short term thinking gets us) but in the long run condo owners win big over renters.

Bach points out that renters spending $1500 per month in rent will spend over a half a million dollars on rent over a lifetime. (and that's if your rent never goes up). Meanwhile, spending the same amount on buying a condo home for $200,000 as you do on rent ($1500 per month), your cost will be about the same to buy as rent. But instead of steadily rising rental costs, you are paying down a mortgage.

At the end of 25 years you will own a home worth more than $645,000 (assuming 4.8% per year increases in value).

Making Your Money Work for You - Get Leverage

In comparison to the the stock market or other investments a condo loan can give you huge leverage. When a relatively small amount of money controls a much larger asset, that's called leverage.

Imagine the banks will lend you up to 100% and more in some cases, for buying a condo home. Few other investments can boast this kind of leverage.

Buy a $200,000 condo, put $30,000 down and if your home goes up just 2% ($4000) the first year you've got a return on investment of 13.3% ($4000/$30,000 = 13.3%).

Tax Free Gain

In Canada the money you make on buying a condo home for a principal residence is TAX FREE. Yes you heard me right, tax free .

And to boot...you've got a place to live! And just remember in Toronto condo prices have increased annually by more than 2%. Condo owners have literally leveraged themselves into huge financial net worth in Toronto in the last few years.

Forced Saving Plan

Remember how the statistics showed homeowners had 29 times the net worth of renters? A condo mortgage is a forced saving plan and many people benefit from this kind of budgetary discipline. Every time you make a mortgage payment, you save money because with each payment youy reduce our loan balance - and that builds equity. The longer you own a home, the more equity you build. Even if your home never increased in value by a nickel, at the end of 25 years, you'd have an asset of $200,000, wheras if you kept renting you'd have nothing but a huge rental payment.

Demographic Changes Mean More Real Estate is Being Bought

Real Estate is a good long term bet, condos in particular. Despite the naysayers and prophets of doom, condos continue to sell at a brisk rate. The iron laws of supply and demand command price increases.

In Toronto in particular, more and more first time buyers are buying condos as the prices of freehold homes have gone astronomical and far above the means of most first timers.

In addition, lifestyle changes mean it's easy for downtown Toronto owners to access clubs, music, libraries and schools at prices comparable to paying rent.

And while living a care free lifestyle close to work with many amenities right in their own condo buildings, pools, gyms, libraries, TV rooms and clubs abound downtown Condos and Lofts.

New immigrants are buying condos; Baby Boomers are selling their homes and moving to condos. The Baby Boom Echo Generation (18-24 years old) are buying condos and driving up the demand for well located downtown Toronto condos. They are aided by low interest rates, inheritances, and parental loans.

Easy Financing

New entrants into the mortgage business have created hundreds of new types of loan products and that has enabled many people to buy a condo when they couldn't have 15 years ago.

Those with damaged credit can get access to financing as new lenders create products designed especially for this type of borrower. Unlike the past, bankruptcy, credit card debt, late payments, defaults and the like are no longer a hindrance to buying a condo.

New products like ensured loans, longer amortization and low down payment programs for damaged credit borrowers make condo purchases more and more accessible.

This will help keep the condo market booming for years.

So don't listen to the doom and gloomers, buy a well located condo in a good area and start building your long term financial future today!

And...you're guaranteed to have a condo home that you love.

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