Toronto Real Estate Investing
February 5 2021
Updated August 2022

Investing in Toronto real estate is an excellent way to set yourself up with passive cash flow through income property. On the other hand, some real estate investors prefer to have a sizable cash infusion by flipping their investment properties. Whichever route you choose, Toronto’s real estate market is ripe with opportunity.

The Basics of Real Estate Investments

Buying an investment property is an exciting but complex process. You must think about how to finance the property. You also have to time the market based, taking into account rental prices, property prices, and other factors. There is also the issue of land transfer taxes and other tax payments. Finally, you must consider your goals for real estate investing.

Financing

The first thing to consider with financing is the down payment. You will need at least 20% of the purchase price as a down payment. The best-case scenario would be to buy the property outright, but some real estate investors make mortgage payments on their properties. It all depends on whether you can afford the entire purchase price upfront and if you are comfortable taking on a mortgage to finance your real estate investment.

Buying an investment property isn’t like purchasing a primary residence. It involves more careful planning to ensure that you don’t lose money on your investment. If you must take out a mortgage on the property, you must secure the best interest rate you can. With interest rates hovering close to zero, there hasn’t been a better time to take out a mortgage in recent history.

Timing

As an investor in the Greater Toronto Area, you must keep an eye on the real estate market. If you’re looking for rental income, you should keep an eye on how the rental market is doing. The best time to enter the market is when rental prices are increasing, but you must approach it with a long-term mindset.

If you’re looking for a property you can flip by adding upgrades like bamboo floors or granite counters, you should time your real estate investment so that you can take advantage of appreciation. A pre-construction property can be an excellent investment most of the time.

Taxation

Anyone involved in real estate investing will have to pay a land transfer tax. If you’re buying a property that’s a fixer-upper, you will have to pay capital gains taxes when you sell it, while if you want to collect rent, you’ll need to pay property taxes every year and income tax.

Goals

The Toronto real estate market offers plenty of opportunities to meet your goals. Before you buy an investment property, you should decide what your goals are, whether they include owning rental properties or flipping a property. Real estate investing involves choosing between long-term passive income and a faster cash infusion generated by fixing or upgrading a property and then selling it.

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Real Estate Investment Options

The Toronto real estate market is filled with investment opportunities. This Toronto investment property guide will help you with your investment decisions.

Income Properties

If you want to invest in Toronto by collecting rent, then you have a wide array of options. You’ll want a property management company to help you take care of all aspects of the rental process, from checking a prospective tenant’s credit score to managing regular maintenance. From houses to basement apartments, you’re sure to find some excellent real estate investment properties in the Toronto area.

Condos

The condo market in the Toronto area is healthy and vibrant, offering many opportunities for real estate investments anytime. Investing in condominiums is a great way to build passive income for yourself, although you will need to build property management costs and condo fees into your business structure.

Flipping

When you decide to flip a property in the Toronto real estate market, you will have to pay a capital gains tax, but investors will find plenty of properties that are ripe for upgrading or fixing up. A good investment is one that will bring a nice influx of cash after all your expenses and taxes are paid.

Mixed-Use Properties

Mixed-use properties contain both residential and commercial properties. Some of these properties contain apartments and retail space, while others may offer office space and condos. As far as real estate investments go, they can be a great way to collect rent every month, or you could decide to flip them to someone who does want to own properties for the long term.

New Construction

Ontario also offers many opportunities for new construction. From condos to cottages, you have a wide array of investment properties to choose from. If you want to invest in Toronto, you may find some of the best value in new construction. Not only are such properties attractive to renters and buyers, but investors can also charge more in rent and receive a higher purchase price.

What are the Benefits of Toronto Real Estate in 2022?

Real estate in Toronto and the surrounding areas offer plenty of benefits for investors. If you manage the buying process wisely and factor in all your costs, such as property insurance, property management fees, taxes and more, you stand to earn quite a healthy income from your investment properties.

Strong Market Appreciation

Over the last decade, Toronto has seen an average annual appreciation rate of 8.3% for residential properties. Compared to the rest of North America, this is a healthy growth rate.

More Gentrification Opportunities

Many communities in Toronto and its surrounding Ontario cities have been undergoing gentrification, which involves transforming them from low-class neighbourhoods into areas for wealthier residents with higher income levels.

Steady and Growing Rent Payments

Investing in Toronto and its neighbouring cities like Mississauga can bring great opportunities to collect rent monthly if you have the right tenant. The rental market in Toronto has experienced a bit of a downturn due to the COVID-19 pandemic, but most of the time, it is healthy and growing.

When the economy starts to recover, we expect the Toronto market to come roaring back. Experts expect rental prices in Toronto and surrounding cities to rise modestly later in 2021 and then spike in 2022.

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Lower Price Fluctuations

Toronto, Mississauga and other cities in its metropolitan area tend to see smaller fluctuations in prices when they do change compared to other cities in Canada. Prices have declined during the pandemic, but not as much as they have in other metro areas. Toronto’s real estate market is being driven by real demand because the area can’t build houses fast enough to keep up.

More Forced Appreciation Opportunities

Many Canadian cities have a lot of newer homes, but Toronto is filled with century-old houses and buildings that require a lot of work. Investors who want to flip properties will find plenty of opportunities to unlock value in the real estate they purchase.

Higher Cash Flow Potential From Upgrades

Upgrading a property can unlock even more value in Toronto than in other cities. You may even be able to convert a single-family home into a duplex or triplex. Because of the nature of the housing market in Toronto, you’ll see much greater value from any upgrades you complete on a property. Investing in the Toronto market could earn you better returns than the stock market in some cases.

Who Can Own Real Estate in Toronto?

Almost anyone can own property in Toronto. Unlike some other cities, foreigners who plan to spend less than six months here can keep property without having to apply for permanent residency.

How to Invest Wisely In Toronto Real Estate

To invest wisely, you must take into account all the costs associated with buying and upgrading a property. You also must get to know the neighbourhoods you plan to purchase property in and understand how much you will be able to get if you rent it out or sell it after upgrading it.

When you have all the numbers, you will be able to make a wise decision by choosing carefully. The best options are properties that require cosmetic upgrades rather than structural ones, but you might still be able to turn a profit on a property that is in especially bad shape if the numbers work out.

Summary

Toronto real estate investing offers plenty of opportunities for savvy investors. Prices are rather depressed due to the pandemic, but that means this is an excellent time to buy in if you are prepared to hold the property until things improved later in 2021.

Toronto is an amazing city to invest in, and if you’re planning to upgrade a property, now is the best time to do it. Any work that needs to be done can be completed while the market is down in preparation for the economic recovery.

Given how strong prices in Toronto have been historically and how rapid the recovery will be, investing here is one of the wisest decisions you will ever make.

Sabine Ghali

Sabine Ghali

Helping real estate investors build wealth over time

 

(905) 268-1000

 

[email protected]

 

Anyone can sell you the “perfect” house, but I strive to find you the perfect home. Perfect for you, perfect for your family and perfect for your budget. From helping my parents downsize to a condo, to helping my closest friends through life changing moments, even the not so great ones, all while creating a wide portfolio of investment worthy properties and moving my kids into a family friendly neighborhood. I have personal anecdotal experience, knowledge, compassion and empathy that aides me in helping my clients with whatever changes they have going on.

My job does not just start and stop with the house, but with you. When you sign with me you are taking on a partner. A partner that will help, guide and counsel you through the new chapter in your life. Call me and let’s take the next step together.

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Sabine El Ghali | Sales Representative | iPro Realty Ltd. | 905-268-1000 | 55 City Centre Dr. unit 503, Mississauga, ON L5B 1M3