Buying a home is road full of forks as buyers have to decide on locations, properties, types of home, and the price that they’re willing to pay for each property. Another important decision is which Realtor or they going to work with, and if you’re reading this, then we hope it’s us (if you’re not reading this we still hope it’s us). Every buyer will weigh each part of their criteria differently; some may be willing to sacrifice location, while others may be fully set on a specific street. It’s a long-term decision that really could have a huge impact on other factors of your life.

Most people don’t realize exactly how many options they have, as properties being offered change over time in a city desperate for density. In the past, rental suites were only included in select houses, and provided a way for owners to decrease their monthly burden, with the suite almost acting as its own rental property. Rental suites have since been added to other property types, like townhouses and duplexes. Not only do these suites help reduce monthly expenses, but they’ll help you build up equity faster than buying a less expensive property without one.

Let’s take a look at an example:

Scenario 1: John is looking to upgrade from his one bedroom condo to a two bedroom condo. The one he’s interested in is asking $750,000, and at that price his monthly mortgage payment works out to be $2,153 with 20% down, and the property would have a strata fee of about $400/month, making total monthly expenses $2,553.

Scenario 2: John’s Realtor also suggested he buy a half-duplex, although it’s more than he originally planned on spending. He kept an open mind and found one he likes listed at $1,198,000. At that price, a monthly mortgage payment works out to be $3,440 with 20% down. As the property is a half-duplex, there are no monthly strata fees, and the half-duplex has a rental suite which brings in $1,000/month. This means John is paying $2,440/month in housing expenses.

John also wants to compare how much equity he will build up over five years with each option, to see what his financial situation will look like when his term is up. He is shocked to find out that with the condo, he will have built up $78,572 in equity, but with the half-duplex he will have built up $126,368. John can’t believe he can spend less each month, and build up 61% more equity over the five year term by buying the half-duplex, so he calls up his Realtor and tells him to prepare the offer.

In five years, John will $47,796 extra in equity/net worth to use as he pleases. He may decide to invest some of it in the stock market, use it as down payment for an investment property (like a presale with only 5% deposit required), or take a vacation.

This also doesn’t account for any increase in the property’s value, which is amplified by the higher price point. If John bought the condo for $750,000 and prices went up 5% over the five year term, his property would be worth $787,500, or $37,500 more than he paid. With the half-duplex, that same 5% increase would take his property from $1,198,000 to $1,257,900, or an increase of $59,900. That would mean an additional $22,400 compared to the condo.

Which property would you rather have?