The truth is, what many would-be investors are actually worried about is the unknown. That’s why I wanted to write this post: to shed some light on what buying an investment property in Vaughan is really like. I decided to focus on someone who (not so long ago) was in your shoes. Her name is Thu, and she recently overcame her own nervousness about investing in real estate—and started creating her portfolio!

If you’re interested in purchasing an investment property in Vaughan but aren’t sure what to expect, I hope you’ll take the time to read about Thu’s experience…

Thu’s investment journey

I’ve known Thu for nearly 15 years. I’m a regular at her salon, so (as you can imagine) we talk about a lot of things. Family, work, our social lives, and—you guessed it—investing! As it turns out, Thu took a strong interest in the condo I bought at 23 Glebe West. And the more she thought about my experience (and those of the investors I know), the more curious she became about purchasing a unit of her own. 

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I should mention that Thu was hesitant in the beginning—as most first-timers are. There are so many questions to grapple with. Am a capable of spotting a good investment? What if I buy a unit and can’t find a qualified tenant? Is now really the right time to take this on? Ultimately, despite her initial hesitation, Thu decided to go for it!

Together, we set out with a budget of about $445,000. Though Thu was keen on finding a property in Vaughan, we also looked at other areas (like Richmond Hill and near the Shops at Don Mills) to get a feel for different locations. In the end, it was Centro Square Condos, located at Weston Road and Highway 7, that caught my new client’s eye. 

There wasn’t much inventory in the building, so we found ourselves rushing over every time something became available. Thu settled on suite 415, a beautifully-designed, 578-square-foot unit with east-facing windows. It’s located in a 7-storey section of the development’s two towers, and there’s a nearby elevator that descends to the underground parking area—which means no long waits to get downstairs!

The details

Wondering how Thu bought the property—and when she started seeing returns? Here’s what happened next…

The condo purchase was financed through a Home Equity Line of Credit (HELOC). There are a few benefits to going this route, but one of the biggest is the flexibility it offers. An HELOC allows you to borrow against your home equity. It’s a revolving line of credit—so you can take out and pay back money as needed.

The asking price for Thu’s investment unit was $448,000. She wound up paying just $446,000, and put down a deposit of $25,000. We were able to negotiate for a financing condition, and one allowing for a lawyer’s review of the status certificate (a crucial document that contains important information about the unit it’s issued for). As a result, we had a comfortable timeframe for getting the mortgage-related paperwork completed by the bank. We also had time to investigate whether there were any potential issues with the building—like pending legal action.

Thu purchased her investment unit on July 17th, 2019. She took possession of it on August 15th, and by the 20th we were ready to start looking for someone to lease the place! By August 22nd, 2019 we had three potential tenants in mind. The one we went with checked all of Thu’s boxes—he was professional and dependable, with an excellent credit score! 

We had been aiming for $1950 in monthly rent, we wound up coming to an agreement for $2000. The tenant moved in on August 26th, eleven days after Thu took possession of the unit. 

The numbers

Understanding the numbers is a challenge for many newbie real estate investors. The good news is, they’re not as complicated as many people think! Here’s how they worked for Thu’s condo in Vaughan.

Expenses & Income

Purchase price: $446,000

Down payment: $150,000

Mortgage amount: $300,000* 

Land transfer tax: $10,790

Legal fees to close: $1500.00

Condo property insurance $350.00 (a year)

Condo fees: $323.15 (per month)

Property taxes: $250.00 (per month) (estimated as they are not assessed as of yet)

*Based on a 5 year variable rate mortgage through the HELOC at 2.81% amortized over 30 years

What about her real estate investment profit? Here’s how it works out each month:

Mortgage: 576.39 (bi-weekly) = $1,134.78 

Condo fees: $323.15 

Property taxes: $250.00 

Insurance: $30.00

Total monthly expenses: $1737.93

$2000.00 (Monthly income) – $1737.93 (Monthly expenses) = 

$262.07 (Money made each month) 

What are you waiting for?

Thu hesitated before finally buying a unit, and she’s far from alone. Every first-time investor has been in the same position. Imagining worst-case scenarios. Finding excuses not to look into the process, what it entails, and how much you stand to gain. In Thu’s case, the money in her GICs wasn’t growing—and she was getting tired of seeing such a small return.

Here’s my take. It’s not the actual cost of investing that we’re afraid of. It’s all those “what if” scenarios that we can’t help but imagine—before we’ve even considered the facts. But the numbers are in our favour. The demand for condos in Vaughan is growing—and in my experience, more and more sellers are seeing multiple offers for their units. 

While I firmly believe everyone should own at least one investment property, I would never pressure anyone to take action they’re not comfortable with (or excited about). As far as I’m concerned, if you’re interested in learning more about the process, it doesn’t hurt to sit down with an expert! So long as you talk to a real estate professional who has your best interest at heart, you have nothing to lose.

It’s time to flip our negative assumptions about investing. Let’s assess opportunities as they come. And let’s seriously consider the possibility that a wise investment could be the key to a brighter future! 

Thinking of purchasing your first investment property? Let’s sit down and have a no-pressure conversation about the process, and your goals! Give me a call at 416-550-7555 or reach out at Lisa@LisaSinopoli.com