House Hacking In Toronto! (Lower Housing Expenses On Your Own Home With A Secondary Suite) - YouTube

Hi Everyone! Welcome to our channel, where we help your real estate investments work

harder for you. I’m Samantha from Elevate Realty in Toronto. With property prices being

so high, we understand that it’s not easy for everyone to buy real estate in Toronto.

But it’s not impossible, and there are ways if you get creative. In today’s video, I’m

going to talk about how you can get into the Toronto real estate market with a strategy called

’house hacking’. Everyone on our team is a real estate investor.

And here’s another fun fact, most of us got started through a form of house hacking even before

they started calling it that. This helped us grow our money quicker while saving on living expenses

so that we can further invest it to grow our portfolios. As a personal testament house

hacking is definitely a great way to get your foot in the door with real estate. So if you

want to learn more about what house hacking is, let’s get started.

Here’s a study by lowestrates.ca that shows how much it costs to live in Toronto in 2020.

As a renter, you’d spend $2,349.07 / month on housing expenses. On the other

hand, a homeowner spends almost double that at $4,223.56 / month on housing expenses in

Toronto. Owning your own home is expensive but the

benefit of this is that you’ll gain from market appreciation in the long run. But because

owning your own home is so high, it’s actually impossible for many people

and that’s why we’re seeing a greater shift of our Toronto population becoming long

term renters instead of homeowners.

Now let me introduce to you house hacking. The concept is pretty simple - you buy a property

and rent out part of it to lower your monthly housing costs. The government encourages home

ownership so that’s why the Canadian Mortgage and Housing Corporation (CMHC) owned by the

government helps you out with various incentives. The big one is if you pay for mortgage insurance,

you can lower your downpayment from 20% which is typical to a lower 5% only which makes it much more attainable

to save up for your downpayment. So with a lower downpayment and lower monthly expenses,

this makes it easier for you to become a Toronto home owner.

So why does house hacking make sense? I’ll

give you four reasons. The first reason is obvious - your

rental income can significantly lower your housing expenses as a home owner. For example,

instead of paying $4200 a month as a home owner, you can rent out your basement for

$1700, which lowers your housing expenses to a much lower $2500 a month.

Reason 2 is that you get the benefits of higher returns as a real estate owner. Toronto’s

real estate is strong and we’ve seen a 7.7% annual appreciation in the past 20 years.

With stocks, you can get comparable returns, but you won’t be able to borrow as much

and at such low rates. So when you take all of this into account, real estate actually

gives you much better returns. If you want to learn more about this, I made a separate

video where I compare stocks and real estate so you should definitely check it out.

Reason 3 is location! If you really want to be a home owner, you might be priced out of

Toronto and are forced to live further away from the city.

This means you’ll spend more time on travel and rack up higher travel expenses. House

hacking allows you to live in better locations, which can actually save you extra time and money.

The final reason is taxes. If you invest the same amount of money in stocks, you’ll

have to pay capital gains tax when you take profit. Like I mentioned earlier, the government

encourages home ownership so they give you a break on capital gains on your principal

residence so you’re not taxed on any capital gains which can save you a lot of money.

Here’s one thing to keep in mind. If you’re buying a house with a basement suite, you’re

likely exempt from capital gains. But if you buy a multi-family home and rent out more

than half your property, your monthly expenses can be very low (you might even be living

for free!) but you’ll have to pay capital gains tax on the portion that’s rented out.

If you want to learn more about this capital gains and secondary suites, you definitely need to check out this

video right here where we talk more about this.

So the point of this video is really to let you know that there can be other options if you

really want to get into Toronto real estate. If you can save enough for the downpayment,

house hacking can help you lower your monthly housing expenses making it much more feasible for you

to buy Toronto real estate. And if you’re thinking about buying outside of Toronto

because that’s all you can afford, just knwo that there are

other benefits like saving travel time and travel costs while getting higher appreciation compared to other cities outside of Toronto.

I hope you enjoyed this video! If you did, please hit the like button for the Youtube

algorithm and subscribe to our Youtube channel to see more real estate videos just like this one

for you. Finally, I wish you all the best in your real estate investing journey, thanks

so much for watching and I’ll see you in the next video!