With some of the highest demand for real estate in North America (especially rental properties), Toronto is a uniquely attractive destination for investment. Along with its thriving market, the city’s vast and diverse real estate landscape offers investors a myriad of options with regard to property types. That said, not every type of real estate will work for every investor.
For new or up-and-coming investors seeking a smooth and lucrative venture, condos make a great fit. In addition to their comparatively lower costs, condos typically make for an easy, hands-off investment experience.
If you’re considering an investment in Toronto real estate, here’s what you need to know about condos.
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Preparing For Your Investment
Understanding Your Goals
There are a lot of upsides to investing in real estate. However, it can be helpful to approach your condo purchase with one or more specific goals in mind.
Are you looking for long-term appreciation, rental income, or a combination of both? Don’t forget to consider how hands-on you’d like to be with the property. Understanding your objectives will guide your decisions throughout the purchasing process and help you narrow down your options.
Setting Your Budget
Just like buying a property that you’ll be living in, investing in a Toronto condo comes with a substantial financial commitment. As a result, you’ll need to outline and create a budget based on your financial resources. Beyond just the purchase price, factor in additional costs such as closing costs, property taxes, maintenance fees (also known as condo fees), and potential upgrades or renovations.
If you’re unsure about your financial readiness, getting pre-approved for a mortgage can be a simple yet effective way to ensure you have a clear understanding of your budget and funding options before you venture into the market.
Work With an Agent
You wouldn’t buy your dream home without a real estate agent and the same thing goes for investing in a condo. Navigating Toronto’s real estate market can be challenging, especially for first-time investors.
Taking this into account, engaging the services of a local real estate agent (or team) with specialized experience in the condo market can be invaluable. They can provide market insights, guide you toward the perfect property, handle the negotiation and closing processes, and provide long-term advice on managing and optimizing your investment.
Should I Buy Pre-Construction?
As a unique type of purchase, pre-construction condos are a dynamic sub-sect of Toronto’s real estate market. But do they make a good investment? Just resale condos, the suitability of a pre-construction investment will depend on your personal goals as an investor and the specific properties themselves.
If you are interested in going the pre-construction route, it’s important to be aware of the adversities that may come up during your investment journey, such as delays in construction and occupancy. Once again, look for a real estate agent who has direct expertise in Toronto’s pre-construction market. They’ll be able to help you identify opportunities that suit your goals while protecting you from potential pitfalls.
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Foundation For a Smooth Investment
While you’re the driver of your investment journey, there are ultimately other people who play a role. In the case of renting out your condo, finding the right tenant can make all the difference in the success and stability of your investment. A great tenant can provide you with an easy, low-stress experience. However, a bad tenant can lead to late rent payments, property damage, and in rare circumstances legal issues. Luckily, as a landlord, you can mitigate these risks by doing your due diligence.
Thanks to the strength of Toronto’s rental market, there is a remarkably vast pool of potential tenants to choose from. While this is ultimately a good thing, it can make the process of sourcing the perfect tenant a little more difficult. That said, it’s extremely important to conduct a thorough screening before allowing a tenant to lease your property. This process is fairly in-depth and can take time and effort, however, it’s well worth the work.
Realities of Being a Landlord
In Toronto’s current real estate landscape, being a landlord is somewhat of a paradox. On one hand, demand and profit potential have never been higher, on the other, larger economic trends have led to a surge in cases at the Landlord and Tenant Board – creating a gridlock that makes it harder for landlords to solve certain tenant-related issues. In some extreme cases, landlords have tenants who are withholding rent and are unable to pursue eviction for several months. This leads to these investors incurring debt as a result of unpaid rent.
Eager to invest in Toronto’s dynamic condo market? As seasoned experts in Toronto real estate, our team would be happy to assist you. Call 416-587-3300 to get in touch or email office@torontoism.com.
