Insider Advice
Two for the money Co-investing in real estate with family or friends can be a win-win proposition in today’s market. Our experts sound off on what you need to know. The Toronto Regional Real Estate Board predicts that by year end, the average price of a home in Toronto will hit $1.025 million — almost $100,000 up from the average in 2020. For first-time buyers, this can make getting into the game trickier — Canadian law requires a minimum down payment of 20 percent to buy a home over $1 million. Enter the co-investor. For those fortunate enough to have the financial means, helping an adult child, a sibling or a close friend with a down payment can pay dividends down the road — not only from the satisfaction of helping a loved one buy their first home, but as an investment that you can recoup at a significant return when it comes time to sell.
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EastTO Magazine
“Co-investing can be very advantageous for both parties, and young buyers can get into markets and neighbourhoods that they never would have dreamed of,” says real estate agent Mark Richards, founder of The Richards Group. For example, if parents contribute half the 20 percent down payment, or 10 percent of the home’s purchase price, then as co-investors they own 10 percent of the equity. “When the property is sold, they get that initial investment back plus the raise in the value of the property,” Richards says. With Toronto prices climbing 15 percent year-over-year, that could work out well for everyone involved.
