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Is Buying a Condo a Good Investment?

Is it a good investment to buy a condo? In this post, we’ll look at the Toronto market—and help you weigh the pros and cons of investing in a unit right now…

It’s come up over drinks with friends, dinner with family, and even lineups for our morning coffee. Here in Toronto, it seems everybody’s talking about investing in real estate. Condominiums are an especially hot topic, due to the sky-high demand they’ve been generating recently. It’s at the point where some potential investors are asking themselves whether condos are worth the hype.

In our experience, buying an investment condo can be highly profitable. But before you make a purchase, you should ensure that you understand your options—and the state of the market. If you’re thinking of investing in a unit, here’s what you should know.

Toronto’s condo rental market

To make a wise investment, understanding the rental market is key. How high is the demand for units? Who’s out in the market looking? And how much are other landlords charging for condos like yours? The answers to these questions are important. They’ll have a major impact on how much income your unit will generate—and whether it’s likely to sit on the market for an extended period.

The fact is, Toronto is growing. There’s been a recent influx of renters looking for affordable housing in the city, which has led to a jump in demand for rental condos. Homeownership is currently out of reach for many of these people, but that doesn’t mean they’ll having trouble making their monthly rent. Often, we’re talking about young professionals with steady incomes and families who are working toward buying their starter homes. Generally speaking, these renters are willing to pay good money for units—which helps explain the 9 per cent increase in GTA condo rents in 2018.

When it’s time to sell

So, is it a good investment to buy a condo? Let’s dig further into the question by looking at what happens when it’s time to sell. Say you’ve been renting your unit out for a few years. It’s been a great, relatively low-maintenance source of income. But now, you’re ready to make some major life changes—and they include selling your unit. The great news is, you’re probably going to get an impressive return on it.

It’s true that the condo market has been on an exceptionally hot streak lately, and conditions won’t stay exactly the same forever. That said, property in Toronto tends to appreciate at a very respectable rate. Of course, it’s always hard to predict the future—especially when it comes to real estate. And we definitely believe in exercising a healthy degree of caution. That said, historical appreciation rates combined with the growing need for affordable housing make Toronto condos a very attractive long-term investment.

Choosing an investment strategy

Once you decide to invest, it may be tempting to dive in quickly. But before you start looking at buildings and trying to crunch the numbers, it’s a good idea to familiarize yourself with some condo-investing basics. Let’s start with a cliche. Location, location, location. You’ve heard the phrase before, and there’s plenty of truth to it. While a condo’s neighbourhood isn’t the only factor to consider, choosing an up-and-coming area or one that’s on a subway line can sometimes result in a dramatically higher return on investment (ROI).

Most importantly, you should align your purchase decision with the needs of a particular target market. A one-bedroom, downtown unit with convenient amenities (like a high-end exercise room or yoga space) would likely appeal to young professionals. In contrast, a condo with multiple bedrooms and decent storage space that’s located near good schools would be perfect for a family.

Ensuring that the property you select will be attractive to a sizeable demographic of renters—and marketing it accordingly—is part of a sound condo investment strategy. A great real estate agent will have the knowledge and experience to help you every step of the way.

Ready to look for your first investment condo? Reach out today to learn what to look for, and what’s available on the market!