If you’re looking to make a buck in Toronto’s real estate market, you’ve got the right idea. Many an investor has made a killing buying, renting, flipping, and selling properties in the red-hot Toronto housing market. First-time property investors will want to keep their initial costs low and their cash-flow as high as possible. If you’re poised to buy your first investment property in Toronto, it’s important to take into account financing for a down payment, taxation, and timing of course. You’ll need at least 20% of the purchase price for a down payment; money to cover any capital tax gains; and realistic expectations (read: long rather than short term plans to profit).
You’ve got options
The bottom line is that when it comes to Toronto real estate investments, knowing your goals is the first step to achieving them. The type of investment you make depends on what you hope to get out of it. Here are just a few of the many types of investment property routes you may choose to travel.
A good investment condo will at the very least break even. Buying an investment condo is a chance to benefit from positive cash flow and appreciation over time. Unique condos in popular locations have historically appreciated more than the stock market! And the rental market is currently at an all-time low for vacancies, so finding quality tenants is typically easy. Condos also have the added advantage of entailing less maintenance and repair work than houses. On the other hand, the Residential Tenancies Act can mean a host of obligations and little flexibility, so be sure to do your homework.
Income properties are houses that have self-contained apartments which can then be rented out. And they’re sizzling hot commodities in Toronto. Houses tend to appreciate faster than condos, so if you’re looking to make money when you sell, an income property may be safer. On the other hand, if you’re living in an adjoining apartment yourself, there is sometimes the issue of dealing with sounds or smells associated with your tenants. Not to mention repairs, renovations, and collecting rent. Plus, having tenants with leases can make it more complicated to sell when the time is right.
While not as popular as it once was, flipping houses is still a daily affair in Toronto. And while it’s not for the meek-minded, it can be highly profitable when done right. A quality flip in a good neighbourhood will be in high demand. But while some flipped houses may end up selling for 10x their initial purchase price, some actually lose money. Remember: renovations always take longer and cost more than you plan for. Flipping takes a lot of time and can be risky. If you’re considering buying and flipping a home, work with a realtor who knows the ins and outs of buying the right property for the right price, in the right neighbourhood—and then selling at just the right time.
There’s a lot to consider when becoming a new investor in Toronto’s real estate market. Be sure to read the Complete Guide for Landlords for a big-picture understanding of how you fit in!