Buying A Condominium As An Investment
Lots of people ask us as a part of their seek for a condo, which ones are better investments. Personally, if I oknew the reply to that 100%, I might be writing this from my own private island. Alas, that is not the case and I write in my house office, searching at the snow.
There isn't any hard and fast rule when it comes to funding condos. A number of it will depend on what precisely you need to get out of it. Some people think of investment condos as leases, while others are thinking of sales worth down the road.
In case you are seeking to buy a condominium to lease out, then there are a number of factors you have to consider.
First, don't just buy the smallest and/or cheapest unit you possibly can find. Not too many individuals are going to wish to live in it - would you? Instead, think of who your goal market goes to be. If you need singles, then one bedroom condos can be fine. When you get to couples (with the potential for children), then you'll wish to think more in terms of bigger units with two bedrooms.
Speaking of which, there has been a latest hue and cry over the dearth of condos which can be suitable for families. Certain, there are a couple of tired old buildings with three bedroom models, however they're few and far Purva Between The Parks. The place are the new units? What are the options for the households that do not need a house? Or these than can't afford a house? Before I get to really ranting, I just wished to point out that condos have to be equal opportunity. They are not just for singles or couples or empty-nesters. Some people wish to raise a family in the sky. Time to do something about it. Anyway, on with the article...
Location can also be going to have a bearing in your target market, or on the available pool of renters who will make up your market. In order for you primarily college students, then look to buy near U of T, York, Ryerson, etc. Remember the smaller schools and colleges, such as George Brown or Sheridan. There are loads of students in Toronto, so there are a variety of options for you to attraction to them.
The flip side in fact, is that if you don't want student renters, do not buy close to the place they would wish to live!
If you'd like medical doctors and nurses and interns and the like, then you'll wish to purchase along Hospital Row, or not too removed from it. Yes, there are more isolated facilties around the metropolis, however stay close to where the biggest renter pool is prone to be.
Many people typically ask about new condos versus resale as rental properties. This is a hard one, however my intestine feel is that new buildings will not be the most effective bet. Maybe if you are going for a 1,200 square foot penthouse with a view to die for, however a simple one bedroom just puts you in the pack with everybody else. If a 300-unit building has 30 people purchase to rent out, you're going to be facing some stiff competition to get a renter into your unit. Chances are you'll be greatest to easily keep away from that sort of competitors and search for resales or smaller new developments.
Talking of competitors, this is perhaps a superb time to delve into a dialogue of rents and their recent decline. With all the rental action in Toronto the past few years, many models have been constructed and many have been purchased to rent out. As with any market, provide and demand dictate pricing. When there are more units than renters, there may be more and more competitors to get those lease dollars. Thus, rents go down.
Even with a decline in rental quantities, if you're buying as an funding, you have to look at the bigger picture. Don't count on to pay your mortage and apartment charges - and make a profit. Those days are gone. But add up all of the monthly expenses and if you get a rental quantity that is not a lot less than you are spending, then you need to think about it more in terms of your mortgage only costing you $100 a month. Even if it is $300 a month, that is significantly less than in case you have been paying everything yourself. You do not get a lot for nothing today, so be blissful that someone is helping subsidize your mortage.
Now, there is one other group of people who are thinking more about sales in the future. Some could also be shopping for a condominium off plans with the considered flipping it as soon as the building is done. I don't want to repeat myself, however basically re-read what I said above about buying in a new development to rent. Being one of the herd just isn't always a great thing.
It used to be that purchasing new and selling it after living in it for just a few years was guaranteed profits. Not a lot anymore. Land costs and building prices are up, plus builders know they can get more for his or her product. Thus you need to think more strategically these days.
There are three things I generally advise when folks ask me what to buy that may enhance over the years.
First is to buy large. Buy as big a apartment as you can afford. This is for 2 principal reasons. The primary is as above, in order not to be one in all one hundred one bedroom models on the market in a building. The second is that a big segment of future condo patrons are going to be empty-nesters and downsizers. Many older couples will be leaving their larger homes and they don't seem to be going to wish to live in a 650-square-foot one-bedroom condo.