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If you’re thinking about buying a condo in Toronto for investment, there is much to learn about the real estate market. The Toronto real estate market is excellent for investors. The Greater Toronto Area is one of the best regions of North America in which to own investment properties. Toronto condos make an excellent long-term investment.

Condo investors who are just getting into the business for the first time will find that the Toronto real estate market offers a wide range of opportunities for passive rental revenue and steady cash flow. Whether you want to become a landlord and rent out condos in Toronto or you want to flip investment properties into resale condos, you’ll find plenty of opportunities in the Toronto real estate market.

What is a Good Real Estate Investment?

A Toronto condo is a good real estate investment for real estate investors who are getting into the business for the first time. Toronto condos capture many would-be home buyers. Many look for a condo as their first home, while others are downsizing later in life. One benefit of renting a condo instead of buying one is the fact that all the problems are taken care of. Real estate investors who own a Toronto condo manage all the issues that arise with the property, which means renters don’t have anything to worry about. For the right price, many would-be home buyers can be convinced to rent.

A good investment property is one that’s in good condition. In some cases, you may want to take on a condo project that requires some improvements before it will be ready to put on the market. In this scenario, you may consider fixing condos up to rent out or placing them on the market as resale condos. If you’re buying a condo investment that requires some fixing up, it’s best to look for one with cosmetic issues that can be corrected easily. You might even consider investment condos that are in the pre-construction phase. Opting for condos in the pre-construction phase will get you into the Toronto real estate market with a good investment that will be ready for tenants as soon as the work is completed.

Is a Condo Still a Good Investment Despite the COVID-19 Pandemic?

A Toronto condo is always a good investment due to appreciation. Home prices in the Toronto market increase over time, and not everyone can afford to become buyers. If you want to purchase one or more rental units, either to flip or to rent out, the condo market is an excellent place to start.

Real estate agents will walk you through the real estate investing process and explain the benefits it offers for you. Real estate investments can offer a passive revenue stream for as long as you own it or a sizable influx of cash when you flip them.

The COVID-19 pandemic has changed the world, but a condo investment is still a wise choice. People will always need housing, and many don’t want the responsibilities that come with owning a house. This presents opportunities for real estate investors.

Condo owners experienced some setbacks due to COVID-19, but by December, the market had come roaring back.

Toronto Condo Investment Gains

The condo market is an important part of Toronto’s real estate. There are several ways to benefit from investments in Toronto condos. As an investor, you have to spend money to make money, and buying a condo in Toronto presents opportunities for investment gains. Condo investments are only as good as the money you can make from them.

Before you invest in any condos, you should sit down with real estate professionals and determine what your investing goals are and whether a condo will help you meet those goals. You also need to know how much money you have to put into it, whether that involves making a down payment and fixing it up to rent or sell or entering into the pre-construction phase to sell at a higher price than what you paid for it.

You must also take other factors into consideration, like whether you will need a mortgage on the condo units you own. Interest rates are also a factor, as is the condo price. It must also be in a desirable location with strong demand, and the less competition, the better.

Downtown Toronto Condo Market

Downtown Toronto is vibrant, and the price per square foot to lease out condos is attractive for landlords. If you’re looking to buy condos for investment purposes, you can’t go wrong with downtown Toronto.

As an investor, downtown Toronto has everything you could want. The prices for units are higher there, but it’s for a good reason. Downtown Toronto is an attractive area for home buyers and renters alike, and real estate investments there are likely to pay off at the right price.

Downtown Toronto offers a wide array of amenities, plenty of shopping, and exciting nightlife. Downtown Toronto is an excellent place to live and work, so condo investments in the area are a wise choice.

Toronto Real Estate Market

You should partner with a qualified, knowledgeable real estate agent when entering the Toronto condo market. Condo investors in Toronto will find attractive opportunities if they work with the right partner. Here’s why the Toronto condo market offers such amazing benefits for investors.

World-Class City

Toronto is a world-class city and a major center for theatre and movie and TV production. Toronto is home to a variety of cultural institutions, including numerous museums and galleries. It also hosts many festivals and public events. The entertainment district is superb, and more than 43 million tourists visit every year. Toronto is also known for its many high-rise buildings and skyscrapers and is home to the tallest free-standing structure in the Western hemisphere, the CN Tower.

Second-Fastest Rising Global City

In 2020, Toronto was named the Second-Fastest Rising City in the World by A.T. Kearney in its annual Global Cities Outlook. The city moved up nine spaces in a year. According to the report, Toronto’s jump was due to “an upswing in innovation and continued strong governance.”

Growing Population

Toronto has a growing population, which means growing demand and plenty of opportunities for investors in their condo projects. Toronto is the capital city of Ontario and the fourth most populous city in North America, with more than 2.7 million people as of 2016.

Extremely Low Delinquency Levels

The mortgage delinquency rate in Toronto is on the rise due to the pandemic, but it’s so small that investors should still be very pleased with it. The delinquency rate rose to 0.12% in the third quarter of 2020, which is the highest delinquency rate seen in Toronto since 2016.

Condos/ Apartments in Toronto: Types of Buyers

There are three main types of buyers in the Toronto condo market. They are real estate investors, first-time home buyers and luxury buyers.

Real Estate Investor

Real estate investors will find attractive opportunities in the Toronto condo market. Toronto condos offer steady income streams over time or a large one-time cash infusion in the case of condo projects that require fixing them up. There is plenty of demand for condos in the GTA, so investors won’t find it difficult to rent out their condo or sell it after fixing it up. The market for condos in Toronto is healthy with appreciation in prices.

First-Time Buyers

First-time condo buyers are looking for an attractive condo at the right price. They generally work with a real estate agent to find exactly what they are looking to purchase, whether that’s a one-bedroom condo or one with more space. Condo prices are competitive in Toronto, but due to high demand, those who have made investments in condos won’t find it difficult to attract a buyer at an excellent price.

Luxury Real Estate Buyer

A luxury buyer wants to purchase high-end condos, either as investments or for their own use. They may be looking to build up their high-class rental inventory and take advantage of the existing demand for luxury condos.

Price for Toronto Condos

Prices for condos in Toronto are rising on a year-over-year basis. Data from the Toronto Regional Real Estate Board indicates that the price of a typical condo in Toronto rose 6.15% between October 2019 and October 2020. The City of Toronto condo benchmark rose 4.55% year over year to $611,100. The pandemic has taken a bite out of the city’s condo market, resulting in falling prices in 2020. However, history shows that it’s only a matter of time before the market comes roaring back. The rest of the market in the area is on fire.

Buying a Condo in Toronto for Investment When Rental Prices Are High

Rental prices in Toronto were once the most expensive in Canada, but as of December 2020, that was no longer the case. However, rental prices remain high despite the declines due to the pandemic, so investors will still see significant amounts of money rolling in.

The best time to buy a condo in Toronto for investment is when rental prices are high. In most parts of the city, it’s actually better to rent than to buy a condo, which means strong demand for investors with condos to rent out. Competition is keeping prices in check for now, but a savvy realtor can help you make the most of the market and demand.

Whenever you’re looking at condos to buy, it’s important to understand your goals. Some investors look for cash flows, while others look for equity gains, which require a long-term outlook of price appreciation. You also must know your budget, down payment, closing costs, and the amount you can expect to receive in rent every month. Closing costs include land transfer taxes and other fees paid to the lender. Real estate agents will be able to walk you through everything before you make any final decisions.

If you look at the price per square foot, you will get a good idea for how much the rental price on the property will be. The key is to find one with a low price versus a comparable unit in the same neighbourhood. A realtor will be able to tell you what neighbourhoods and floor plans are in demand, which will bring a great condo price on the rental market.

You should look for condos that will enable you to charge a premium in rent in order to maximize your revenue potential. You also want to look in attractive neighbourhoods. Pre-construction condos may offer the best return on investment, especially if you are planning to resell them.

Example of a Condo Investment

It’s important to note that with every example of a condo investment, there is a certain amount of opinion involved in determining whether it will be a good investment or not. The two types of returns on any condo are appreciation, which is how much the value of the property goes up over time, and yield, which is how much you receive back on your investment.

Let’s look at one example. Say you bought a condo for $320,000. The monthly maintenance fees are $350, and the taxes are about $1,900 per year. The tenant pays $1,650 per month in rent. You pay 20% of the price as a down payment with a 2.3% interest rate, resulting in a monthly mortgage payment of around $950.

Cash flows are the amount of money you’re left with at the end of the month. Subtracting the expenses from the income, you’re receiving almost $200 in cash after expenses every month. It’s always best to have money left over after expenses every month because you never know when you’re going to have to put money into the property. You should never count on appreciation alone to increase the amount of money your investment is worth.

FAQs

Is buying a condo a good investment in Toronto?

Depending on the condo price, you can find some good investments in Toronto. Prices are falling now, which means it is an excellent time to get into the market. Demand remains high, so you should be able to keep your condo occupied with rent coming in if you decide to lease it out. Because prices are falling, the property may not appreciate in value very much in the coming years. However, history tells us that the market will come back again, so you probably won’t have to wait very long for appreciation to kick in.

If you want to buy a pre-construction condo to resell or lease out, you may see more value for your money. If you can get a good price on a pre-construction condo, you could be able to resell it and make a profit quickly. However, you should be prepared to hold onto it and possibly take on renters if you can’t unload it at a higher price than what you bought it for.

If you play your cards right, a condo in Toronto is an excellent investment. Real estate agents will help you make the most of your investment.

Can you buy a condo as an investment?

It’s easy to buy condos as investments. If you have the cash for a down payment and to complete repairs as anything comes up, you’ve got everything you need to buy condos for an investment.

How much do you need to make to buy a condo in Toronto?

You need at least 20% of the price of the condo for a down payment. You should also assume that it doesn’t bring in any revenue for the first few months while you look for renters if you’re planning to go that route. For example, condos priced around $600,000 would require you to put down $120,000. You should be making about $120,000 to $160,000 to afford a $600,000 condo.

The median income in Toronto is about $100,000, so at that level, you could qualify for a mortgage of around $590,000. However, if you’re planning to buy it as an investment, you should aim for lower than that because you need to have money on hand to pay for things like maintenance, fees, and closing costs.

Conclusion

Condos are an excellent way to make some extra cash, whether that means passive revenue streams or a one-time cash infusion when you resell it. Pre-construction condos offer the best value. Whatever you do, you’ll need to plan carefully to ensure that you don’t lose money on your investment.