A lot of people (local and foreigners alike) are looking to make money in Toronto’s real estate market. Historically, quite a few investors have profited from buying, renting and selling properties in this city, including those who bought condos for sale in Toronto.
If this is your first time to buy a piece of property here, it’s important for you to know that getting a mortgage for a second property isn’t as easy as applying for a loan for your primary residence. You’ll typically need to put up a minimum of 20% of the purchase price for the down payment. If you want to purchase commercial properties, you may need at least 50% of the purchase price for the down payment.
Another thing you need to familiarize yourself with is taxation. If you want to rent out your property, any money you collect from rent is considered income in Canada and that means it is subject to regular taxation. Timing is also another important consideration. Don’t expect to profit from your investment within a short period of time. Doing so is risky due to the unpredictable nature of the real estate market.
Investing in a Condo
Toronto has many impressive condominium buildings scattered all over the city. The high demand for condos here is changing the landscape. Investing in a condo is actually a good thing for the following reasons:
- Finding a good tenant is easy due to the all-time low vacancies in Toronto.
- If you find a condo in an excellent location, then you’re assured that it will appreciate more than the stock market, if you were to base it on historical data.
- There’s opportunity for appreciation in value and cash flow.
- Condos require less maintenance than a single family house.
Of course, there are also drawbacks that you need to be aware of if you’re thinking of buying a condo as an investment. You need to familiarize yourself with the guidelines stated in the Residential Tenancies Act, which require a lot of responsibilities from landlords. It’s also imperative that you look at this as a long-term strategy, because investing in real estate is never an ideal short-term investment.
To help you find a good condo in Toronto, keep in mind the following tips:
- Seek pre-approval from a back first. By doing this, you’ll know exactly how much financing you will be able to afford.
- Work with a real estate agent who is familiar with the condo market in Toronto. They can even help you determine which options are good investments and which ones you should avoid.
- Get to know the neighborhood in which the condo you’re interested in is located.
- Compare the prices of comparable condos in the same area. Overpaying for your condo is a surefire way to lose money, especially if it’s an investment property.
- Know the condo association’s rules, especially in regards to rental properties.
- Consider all costs before you make a decision. There are other costs on top of the purchase price of your condo such as closing costs and transfer fees. You should also be aware of the costs to fix the unit as well as the cost of advertising. All these things should be considered so you’ll know if you’re actually going to get a return your investment.