Are you putting off buying a home because your dream property feels financially out of reach? The Toronto and GTA real estate market can seem intimidating. But does that mean you have to settle for renting forever?
Absolutely not.
Many first-time buyers are adopting a smart approach: they’re purchasing what they can afford right now—even if it doesn’t tick every box—living in it or renting it out, and using that equity to eventually upgrade to their ideal home.
“In this market, expecting a first-time buyer to land their dream home right away is quite unrealistic,” explains Todd Armstrong, a broker at Property.ca Inc. and West GTA Branch Manager. “Unless you have significant financial backing, saving for your ‘forever home’ might not be the best path.”
The challenge with saving for a large down payment is that while you’re saving, home prices often continue to rise, forcing you to save even more. It’s a never-ending cycle of trying to catch up.
Instead, consider buying what you can afford with your current down payment—regardless of location or condition. It might not be in the prime area or have all the modern finishes, but the key is that it fits your budget. Secure that purchase.
You don’t have to live there Here’s the twist: you can continue living where you are and rent out the new property.
Sounds intriguing, right?
Imagine you buy a cozy one-bedroom in a place like Hamilton, Burlington, or Barrie. If it’s not quite right for you or is a bit too far from the city, lease it to someone else. If the rental income covers your expenses, your mortgage will be taken care of, allowing you to build equity while the property appreciates over time. After a couple of years, you can sell it, tap into the value you’ve built, and use those funds to purchase something more aligned with your goals.
Still short on cash for your dream home after selling the rental? Repeat the process—maybe even a few times. Eventually, you’ll accumulate enough funds to buy that ideal home in your desired neighborhood.
“Just keep in mind that this strategy requires patience,” Todd cautions. “Stay focused on your long-term goal. I’ve seen many buyers succeed using this method, and many wish they had thought of it sooner—they could have entered the market earlier and paid off their homes more quickly.”
What about a fixer-upper? Consider properties that need a little TLC; they often come at a better price. A variation on this strategy is to buy within your means and then make improvements yourself to increase the property’s value. You don’t have to be a DIY expert or spend a fortune to make impactful upgrades. A fresh coat of paint, some new flooring, updated countertops, and modern lighting can work wonders.
“There are buyers who crave a move-in-ready home and will pay a premium for your hard work,” Todd shares. “You can purchase a home that needs some love, enhance its appeal, and sell it—boosting your down payment for your next investment.”
In summary, if you’re eager to join the property market but your dream home feels out of reach, starting small is perfectly fine. You can wait for prices to drop (not likely) or for your income to increase—or you can take control of your homeownership journey by starting where you are and gradually working your way up.