Why Buying An Investment Condo In Toronto Is A Good Idea?
Monday Jun 03rd, 2019
Right real estate investments can be life-changing and bring a great boom in one's finances. Those of you have a keen interest in the real estate market might keep a check on the developments coming up in different regions of Toronto. Are you wondering if purchasing a condominium in Toronto in the year 2019 would be a good idea?
Purchasing a condo is no easy decision to make! There are plenty of factors that an individual need to consider before making the final choice. After all, buying a condo unit is an expensive affair and hence, the research must be proper and comprehensive.
Real estate market trends of the year 2019
Over the past couple of decades, Toronto has made a significant mark for itself on the world and is termed as a developed city. Hence, with all the development and growth, the need for real estate developments, and especially condominiums have witnessed a great rise too.
- High competition in the market
The vacancy rates in the city are quite low while the rent is on a higher edge. And, with more and more developers coming up in the city, there is high competition amongst them as to who is capable of providing the best amenities and attract more investors.
- Source of monthly revenue
The investors of real estate find it very attractive to purchase a condo unit and put it out on rent to gain a monthly revenue out of it. And, observing the past year trends, buying a property in Toronto has always proved to be fruitful for the investors.
Understanding the financial numbers involved in the condo purchase
When one thinks of the net gain, it is essential to consider the net cost being spent on the purchase and the revenue being gained from the purchase. There are a number of aspects that often go unnoticed in the first glance at the overall costs. These would include the periodic maintenance that would be required for the condominium. Also, the house taxes that would have to be paid and other condo fees specific to the developments.
After analyzing the different costs and the regions for their condo unit rates, a decision should be made regarding the purchase. Since we are talking about a city like Toronto, the gain is expected to be quite good. Therefore, the only confusion left to be dealt with is- which region condo should one invest in? The answer to this question depends completely on one’s own choices and perception about the areas of Toronto. There are varied perks for the city-side condos and those located in serene, natural places such as the Lakeside. The prices of condo developments of different regions vary and so do the renting costs.
What are the factors to consider while making a Toronto condo purchase?
Since the point of consideration is pertaining to making a condo purchase for investment purposes, the target market is one of the most essential factors. Apart from the target market, the location of the development affects the overall condo costs. For luring the individuals to rent the condominium unit, one needs to ensure that the condo development has a quite decent transit and walk score. That is, the place should have easy access to the various transit options.
Apart from the accessibility issues, availability of commodities like shopping and grocery centers, medical facilities and entertainment offering places should be in close proximity too. It is important to remember, the more the facilities, the higher is the revenue one can gain.
The size of the unit also makes a difference. And, the size of the condo one decides to buy should depend on the budget at hand as well as the target market. As per the generally observed scenario, it is comparatively harder to find willing individuals for rent for a large sized condo. And, the smaller sized condos get occupied easily and fetch higher per square feet rent than the others.
Toronto has an affordable real estate market.
Fortunately, Toronto real market is quite affordable. Thus, if one has the needed capital, buying a condo unit is probably the best investment one can make in the region! Over the years, there has been an increase in the average costs of condo units. In spite of that, the rates of the market are affordable.
When one talks about areas like Downtown Toronto, the local area and the facilities present around the condo developments are overwhelming. Literally, there is everything an individual looks for available right in the neighborhood.
The market is expected to remain high for quite a while
The real estate market in Toronto is not expected to witness a downfall anytime soon. Moreover, even when the prices do go slightly low, it won’t be a sudden change. The government of the region is quite stagnant and strategic in approach. Thus, the market won’t face major losses at any point. Overall, the market expenses won’t be much affected.
The place has witnessed ups and downs in the last few years. But the trends suggest that the market has managed to hold itself upright through it all and still stands amongst the best investment options in Toronto.
The effect of Fair Housing Plan
In the mid of 2017, the market was out of control and even though there was a Fair Housing Plan introduced, the prices weren't curbed much. The report of the Fair Housing Plan is for measuring the effect of extending rent control over tracking the conversion of scheduled apartment projects into condominiums. However, not every change as recommended in the Fair Housing Plan was effective. Premier Doug Ford tweaked the Rent Control Act by providing renters as well as investors with exactly what they needed.
There is a need for the Toronto market to stabilize and the investors will continue to contribute to rental inventory for the same. Until that happens, renters will be protected under the Rental Tenancies Act.
The increasing demand for commercial real estate
The demand for commercial real estate in Toronto is at an all-time high being the second fastest growing office market in North America. Moreover, the rate of vacancy is lower than ever. Due to these reasons, the companies around the region are willing to pay any price to get a space in downtown. Major tech companies like Uber, Microsoft, LG, etc. have been attracted to downtown.
The Well, a new development at the Front and Spadina will have Shopify as one of the lead tenants at the development. Another major company, Microsoft will be shifting their Canadian headquarters to the CIBC square which is currently under a developing stage at 81 Bay Street.
If you are planning to invest in the commercial real estate market of Toronto, the initial investment might be high. However, with the sky-high rent roll with an increase of 9.3% this year, there is not a better investment in Toronto.
Toronto’s Strict lending guidelines
Getting a property in Canada is quite tough. The guidelines allow only qualified people to be able to purchase a property in the country. If they are in need of a loan from the bank, they will have to cross certain safeguards.
Due to such guidelines, the real-estate market doesn’t destabilize. There will not be rushed sales and owners will not accept low prices. Now the buyers in Toronto especially are quite well funded to be able to purchase a property in the region.
Reasons why the Toronto real estate market is so stable
There are multiple factors that play a part to make the real-estate market stable. Here are a few:
- A world-class city
The "tech hub" of Canada and the Silicon Valley of North, Toronto has boosted its profile to that of a world-class city. As per the Global Liveability Report, the city was placed at number 4 on The Most Liveable Cities list. Toronto has been amongst the best cities in recent years. The city also featured in the list of Top 10 Future Proofing cities in the world.
Quite rapidly, Toronto has turned into a world-class city. However, when you compare the per square foot price with other cities like The States, there isn’t a better deal that you can get.
- The growth of the population
In G7, Canada is the fastest growing country. Also, the country is ranked at number one in the world for the quality of life. Especially the region of Toronto has seen a drastic increase in the population. Even the proportion of immigrants in Toronto is at 8.4% while Canada as a whole stand at 3.5%.
The numbers are expected to increase by a staggering two million by 2023. Another thing that makes Toronto an ideal place, is the quality of living. The city ranks at 16th in the world. Moreover, the rate of the dollar is quite low.
- Great transportation facilities
The transportation facilities in Toronto are world-class. Especially the condo development these days are all located around the major stations and public transportation services.
The GO Stations along with buses connect residents to every corner of the city. The Union Stations help the residents to travel local and intercity as well. Also, the well-laid highways make communication one of the easiest things in Toronto.
Moreover, residents can find all the major stores and necessities in the vicinity. So, you won't even have to travel distances if you stay in Toronto.
- State of the art educational institutes
All throughout Toronto, there are some quality educational institutes and centers providing world-class education in different sectors. Therefore, a lot of students opt to take condos on rent around these popular institutes to make it easier for them.
Renting out condos to students can be a great investment as it will be very rare when your property will be vacant.
- Toronto is a business hub
The city of Toronto has every major store and office. There are numerous commercial spaces taken up world-known tech companies. Moreover, the commercial sector of Toronto is also blooming at a very rapid pace. Due to this, there are requirements for condos and apartments for working people to stay in.
- Condos are full of attractive amenities
The condos in Toronto are complete with every luxurious amenity that one would need. One can spend an entire day at home and not feel bored to tired. The amenities such as gym, fitness centers, party and meeting rooms, parks and multiple other features attract multiple potential residents to invest in Toronto.
- A long-time investment
The rate at which commercial and residential activities are growing in Toronto is quite rapid. People are investing in Toronto looking at the current state of commercial activities in the city and the rate at which it is blooming. Therefore, investing in Toronto solely for a long-time investment wouldn’t be bad.
Reputed real estate developers make the task difficult
Toronto has witnessed a rise in the number of real estate developers and overall, there has been an increase in the condominium developments that these developers are working upon. Due to the presence of top-class and reputed real estate developers all across the city, it becomes slightly tougher to decide on a condo development even after one is fixated on a particular location.
Buying an investment condo in Toronto is certainly a wonderful idea! It all depends on an individual what type of condo unit he/ she is planning to invest in. Whether it is a luxury condo that one is eyeing or a small, cozy one in the busy streets. As mentioned, a lot of these variations are inspired by one's choice preferences, target market in mind as well as the financial conditions.
Because it is only about investment for the condo purchases, in this case, it isn't much sense to go overboard on your budget and spend extra on an investment condo. The idea is to purchase an investment condo in the budget and reap financial benefit from it for a long time to come.