Are you thinking of buying a condo as an investment? If so, you’re in good company. Toronto’s condominium market is highly attractive to investors, who appreciate its immense potential for future growth. While owning a unit in the GTA can be highly profitable, you may be unsure whether it’s the right investment decision for you.
If you buy a condo, it will likely be one of the biggest purchases you make in your lifetime. It’s therefore important to ensure that you have the facts before making a commitment.
If you’re weighing your options, here’s what you need to know about investment condos in Toronto…
Toronto’s investment potential
One of the best ways to get a good return on a condo investment is to turn your unit into a rental property. Across the GTA, demand for rentals is exceptionally high. The city’s economy is strong, and the job market is booming. Put simply, there’s no shortage of renters who have healthy incomes and a strong desire for the convenience that condo living provides.
Whether you’re planning to rent out your unit or occupy it yourself, it’s important to consider the return you’ll likely receive if you decide to sell it down the line. Nobody can predict the future. That said, you can feel secure in the knowledge that Toronto has a history of solid long-term appreciation rates.
What makes a good investment condo?
Not all investment condos are created equal. When you’re looking at units, there are several factors you should consider. One of the most important is location. Some investors choose to look for up-and-coming areas, while others stick to neighbourhoods that consistently provide high returns.
Wherever you decide to invest, it’s critical to determine who your most likely buyer will be. If you’re looking at units with luxury features and finishes, you’ll want to target condo hunters in the high-end market. If you’re touring units with several bedrooms and ample storage, they’ll most likely appeal to families. Condos that are closely aligned with the needs and preferences of a specific buyer demographic are often great investments.
Running the numbers
Are you still wondering if buying a condo is a good investment? While it’s fair to say that Toronto is a great place to invest in a unit, every property is unique. To understand whether a particular condo is likely to provide a good return, you’ll want to do some basic arithmetic.
Start by determining how much money you can reasonably expect to receive from rent. To gauge your potential income from a given unit, look at the sums that landlords are charging for similar condos in the same neighbourhood. These numbers should give you a pretty good idea of how much renters are willing to pay. Once you’ve conservatively estimated what your income will be, subtract your monthly expenses.
If the money a unit brings in is higher than the expenses associated with it, it’s said to be cash flow positive. This type of property can be highly profitable. That said, condos that provide negative cash flow can still be good investments in some circumstances. To obtain a clearer understanding of real estate investment metrics, consult with a qualified financial professional.
Identifying a unit with the potential to help you meet your investment goals can be a challenge. Fortunately, you don’t have to go through the process alone. Reach out today to get started.