What ROI do you need for a Toronto Condo?

By
Real Estate Agent with RE/MAX Realty Specialists Inc.,

For those who are concerned about a "bubble" there needs there needs to be an excess of inventory that causes Toronto condominium to go vacant ( without a tenant ). There seems to be a continuing population growth in Toronto, Ontario that IMHO is summed up as safe have and educational / vocational opportunity.

This is borne out by many years of competitive markets not only for condominium purchasers but also renters.  New buildings  ( mini communities IE Beyond the Sea, Windermere by the Lake or Eau de Soliel ) are attracting buyers worldwide. Stable and Low Mortgage Rates are just feeding the buying.

The rental market in Toronto condominiums is heating up, with increasing numbers of units being leased rather than sold and rents continuing to rise in the first quarter of 2013, an analysis by the market research company Urbanation suggests.
There were 31 per cent more condo units leased in the first quarter than a year ago, Urbanation found, and rents were up 4.4 per cent, a gentler jump from the 5.9 per cent increase that occurred between the first quarters of 2011 and 2012 but still a significant rise, said Pauline Lierman, Urbanation's director of market research.
The average rent was $1,856, or $2.33 per square foot, in the first quarter compared to $2.11 in Q1 2011.
That jump in rent of more than 10 per cent in two years is mainly a product of demand, with the most desirable units in downtown locations close to transit lines and amenities, Lierman said.
"The vacancy rate is barely over one per cent for rental condominiums," Lierman said. "The market has remained tight." http://www.huffingtonpost.ca/2013/05/14/toronto-condo-rents-soar_n_3274279.html?utm_hp_ref=canada-business


In my own experience I have observed that condos are renting for half their purchase price divided by 100 to calculate monthly cash flow. For example at $400,000 for a well appointed two bedroom, two full bath unit, it is not uncommon to seek rents at $2,000 to $2,200 depending on building amenities. [ 400k divided by 50% then divided by 100 results in a rental of $2,000 per month ]

With average downpayments of 35 - 40% Investors can calculate a reasonable ROI   compared to keeping money in the bank or a GIC.

With restricted credit policies and aging buyer demographics larger homes eventually will fall out of favour by cost and size.  Then add in a vacancy rate near 1%,  Condo investors are looking at the upside of holding their investment long term and that is what real estate is all about. 

Would you like to invest in a few condos?   Call me. 

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Rainer
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Mark Delgado
houses for rent, Solano County & Glen Cove - Benicia, CA
Benicia and Vallejo, Property Management, rental h
A very nice analysis for investors to consider. As a property manager we often see ourselves providing similar feedback to help investors make their decisions.
May 15, 2013 10:18 AM #1
Rainmaker
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David Pylyp
RE/MAX Realty Specialists Inc., - Toronto, ON

Hello Mark Delgado!

Thank you for your support and compliment!

 

To your continued success in Solano County!

 

 

May 15, 2013 11:11 AM #2
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Rainmaker
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David Pylyp

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