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David Reimers, a real estate advisor with Royal LePage West Real Estate Services, says it is becoming common for parents to help their children buy their first homes. ?"In my experience over the last three years, about one-third of buyers have been helped by their parents, and this trend...
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David Reimers, a real estate advisor with Royal LePage West Real Estate Services, says it is becoming common for parents to help their children buy their first homes. ?”In my experience over the last three years, about one-third of buyers have been helped by their parents, and this trend is increasing,” Reimers says. “I’m an example myself. My parents helped me with the down payment on my first home. I wouldn’t be where I am today without their help.” So, if your child is looking to make the big purchase and you want to give him a boost, Reimers has five tips that will help you bring your child one step closer to owning a home of his own. 1. Show them the money One of the most common ways for parents to help is a gift towards the down payment. “20 per cent or more of the purchase price is ideal to help avoid mortgage insurance,” recommends Reimers. “This saves your child from paying thousands of dollars in insurance premiums.” 2. Help them move up to a home that makes money Reimers says helping your kids pay a bit more for a home with rent income potential will pay dividends in the long term. “Homes with income potential, such as a secondary basement suite, help to offset the cost of financing,” he says. “Homes with suites are typically priced a little higher than those without them.” 3. Look for income potential Even if a home doesn’t currently have a suite, the property may have suite potential. “In one of my earlier properties, I converted the basement into a two-bedroom suite for $40,000,” Reimers recalls. “The monthly income was $850. Where can you buy an investment property for $40,000 that will give you a return of $850 per month?” 4. Temporary financial help may be all that is needed If parents can’t afford to give a large amount toward the down payment, there are innovative programs, such as the Purchase Plus Improvements program, that will allow them to provide temporary financial help. “The program is perfect for homes that need a little work, or where there is secondary suite potential,” Reimers says. 5. Why wait? Buy now If you’re a new parent, why wait 25 years to help out? “I don’t know anyone who regretted buying a piece of real estate 25 years ago, or even 10 years ago,” says Reimers. “Why not buy a cash-flowing investment property today that could later be gifted in whole or in part to your child when they graduate?”