Despite the Covid-19 pandemic still lingering in Canada, this can still be an ideal time to enter into real estate investment, especially Greater Toronto Area condominiums.
The average price for a Toronto condo in January, 1996 was $133,600 while in May of 2020 it had reached $578,280 for an appreciation of approximately 332 percent and about 14 per cent each year. Over the last five years, condo prices in the GTA have appreciated an impressive 52 per cent.
Buyers and investors who intend to rent out their Toronto condo are required to have a 20 percent down payment if they’re approved for the mortgage and 5 percent down if it’s going to be their primary residence.
The downtown Toronto area has been a fantastic and profitable area for condo investors since both the appreciation of and demand for rental units are high. Condos can be rented quite quickly and for a good profit. Historically, downtown Toronto condos have seen a higher appreciation rate than other areas of the city.
However, not all condo owners purchase units to rent out right away. Some prefer to live in the unit themselves for a few years. When shopping for a unit, it’s a good idea to search for a condo and building that suits your personal lifestyle and needs as they are at this moment in time.
There are a number of reasons buying a Toronto condo is an attractive option. For the first time buyers, a condo can be a starter home as the average price is still quite more affordable than most other housing options in the community.
Real estate investors also help drive the Toronto area condo market due to the high rate of return and the ease of managing their investment; property management takes care of things such as maintenance, repairs, landscaping and snow removal.
Those who are looking to live a luxurious lifestyle also prefer to reside in downtown Toronto. The area provides the way of life and status they seek. This is especially true in areas such as Yorkville, King Street, the Entertainment District and the waterfront.
Understanding your goals is crucial when it comes to investing. Are you looking for cash flow or longer term equity gains? Before you purchase, set your budget, calculate your precise closing costs, and understand the taxes owed and rebates available. You’ll also need to decide if you’re looking for an existing condo or one that is pre-construction.
If you pay attention to the condo’s price per square foot, you’ll better understand the potential for profit. The lower the price per square foot the better the investment returns will be. Other factors to consider when investing in a Toronto condo include the builder’s reputation, the location, the floorplan and if the area is going to be home to additional infrastructure development in the future.
The best way to spot a good deal for inexperienced buyers is to enlist the professional assistance of an experienced real estate agent. This will help you purchase an investment where a premium rental can be charged. Many renters are willing to pay a premium to live close to major transit routes such as highways and subway lines.
When investing in a condo it’s generally a good idea to think long-term, as your investment will amass more equity the longer you own it. Your investment’s market value will typically rise as the mortgage decreases.
Just remember that when your investment property is sold the government will want 50 per cent of the net profit to be paid in capital gains tax as it’s considered to be taxable income. However, some expenses can be deducted. Be sure to learn and understand all of the rules and laws regarding renting, whether it’s to a long term tenant or via a short-term vacation rental. If your investment is sold or flipped too quickly you could be taxed on 100 per cent of the profits as business income since you may be regarded as a trader instead of an investor.
For more information on Toronto condos as a real estate investment please contact us at lisainopoli.com.