- Despite increasing costs, real estate remains a high confidence, secure investment.
- Real estate is an appreciating asset, with Toronto detached homes rising in price by over 23% between 2021 & 2022.
- Real estate investors experience unparalleled asset-building throughout their ownership.
- Lotly investors reap the rewards of real estate appreciation without the headaches of a mortgage or tenants.
Is it just us, or has the number of real estate agents skyrocketed in the last few years? For every 20 people you went to highschool with, it seems a handful are advertising their real estate services on Instagram.
It’s not just you — the real estate industry is booming, and higher prices for homes in Toronto mean bigger commissions for agents. No wonder Ontario has over 82,000 active real estate agents!
Which got us thinking: agents aren’t the only ones on the real estate gravy train. It’s investors, too!
In many cases, they’re paying the big bucks, but it’s not for nothing. Real estate is a solid investment — and that hasn’t changed in the last few decades, even with the market’s ups and downs.
The problem is accessibility, especially in Toronto and the GTA. But with a bit of flexibility, we at Lotly aim to make real estate a much more accessible undertaking for Toronto investors.
But the question remains: is real estate still a good investment? We say yes, and we’ll explain why.
1. It beats inflation
Notice your groceries, gas, and pretty much everything else getting more expensive? You can blame inflation, which sits at a 6.9% high in Canada as of November 2022. In fact, some costs have risen even higher than that.
As an investor, you know more than anyone how inflation can disintegrate your cash. After all, that’s why you started investing in the first place. Experts estimate that even if you saved up $100,000 in 2022, inflation would dwindle that amount significantly by the time you retire.
That is, if you don’t invest it.
What if you invested that $100,000 into five properties through Lotly’s investor program? Check out our appreciation split calculator to find out how hard that real estate appreciation would increase your investment — a promising combat to inflation.
2. It’s more flexible than other secure investments
Real estate investing is secure. Even with market dips, it always comes back up. Plus, it’s more flexible than the secure RRSP or GIC. You can flip, refinance, sell, live in, or rent your property.
And if you’re investing with Lotly, it’s even more secure. How? You’re not forced to sell if you experience a dip in income — that’s on the homeowner. The appreciation plus your investment still comes back to you, regardless of whether they sell or refinance.
The best part? No mortgages, no maintenance, no tenants, no headaches.
Intrigued? Learn more about becoming a Lotly real estate investor.
3. It’s a source of income
If you have the means to purchase rental properties, the dividends on your S&P Vanguard investment won’t come close to how much you can make in rental income — especially in Toronto. If you’re entrepreneurial, you can turn a real estate investment into a rich source of income. And you can do it in a few ways.
First, you can rent to long-term tenants. Even with a big mortgage, Toronto rents are quite high, which is usually good news for an investor. In many cases, you can use the income to cover your mortgage and then some.
Second, you can rent to short-term tenants. Toronto Airbnb hosts earn an average of $2,565 monthly or $205 daily for those shorter-term guests. This route requires more maintenance on your end, but you avoid the responsibilities that come with long-term tenants including the Residential Tenancies Act and Landlord & Tenant Board.
4. Real estate appreciates
A chunky investment in real estate will almost always earn you appreciation. In fact, we’d go so far as to say it certainly appreciates over time, provided you rough out the odd market dip.
Here’s a quick rundown of real estate appreciation in Toronto in the last ten years.
Average prices for detached homes in Toronto (October 2012-2022):
- 2022: $1.44 million
- 2021: $1.25 million
- 2020: $1.14 million
- 2019: $1.03 million
- 2018: 1.02 million
- 2017: $1.12 million
- 2016: $933,000
- 2015: $816,000
- 2014: $732,000
- 2013: $667,000
- 2012: $615,000
Source: Toronto real estate price history
These appreciation figures don’t even account for the amount of appreciation you can control yourself. For example, you can recover over 75% of the money spent on a kitchen renovation when you sell or refinance.
5. You can leverage it for other investments
Say you need a big business loan for a new venture. Or you’d like to invest in a second, third, or fourth property.
In most cases, you’ll be hard-pressed to find enough capital to do this, especially after tying up your money in investments. But real estate allows you to tap into home equity without selling — this is the beauty of refinancing.
If your real estate property appreciates, you can refinance with your current lender or a new one and receive a second mortgage to fund your next venture. Of course, you’ll still need to pay this money back — but mortgage interest rates are much lower than personal or business loan interest rates.
Passively invest in real estate with Lotly!
Real estate remains a secure, lucrative investment — especially in Toronto. But investors might feel intimidated by the sheer responsibility of managing a mortgage or property.
That’s where Lotly comes in with our unique passive real estate investing model. You can invest as little as $1000 toward the down payment of a homebuyer's property with our fund, acquiring you shared equity in the home. Then, when the home refinances or sells, you’ll receive your initial investment and appreciation.
The downside is you don’t have the option to leverage the investment as you would as a homebuyer. But if you don’t have to worry about a mortgage, maintenance, or tenants? Sounds like a solid route to a passively generated ROI!