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A large number of condo buyers in downtown Toronto are first time buyers who enter the journey of homeownership with the intent of moving up to a larger home after a few years to start a family. The data is loud and clear about Toronto's condo market; it has shifted into buyers territory and now buyers have the upper hand in the condo market. The days of bidding wars seem to be long gone. Condo sellers are having a hard time getting the price they thought they could have gotten earlier in 2012. Should one sell or refinance the condo and rent it?
Opportunity in Toronto Condos
I recently had a number of clients who had their condos for sale, but didn't get the price they wanted. They had 2 options to entertain:
1. Sell at a price lower than expected and take a loss 2. Refinance condo, pull the equity out and rent the unit
I choose to look at situations with a glass half full perspective. I showed the clients by taking advantage of today's low rates and the shortage of rental units in downtown Toronto, there is an opportunity to generate positive cash flow, have someone else pay down their mortgage and wait for a few years till the market balances itself out.
In all cases, the clients had multiple offers on their condos for rent, got higher rent what they listed the condo for and rented the condos to professionals who are easier to manage. Here are examples of what some of the condos were listed and rented for:
List: $1800, Rent: $1900 (Bathurst & King) List: $1600, Rent: $1700 (Cityplace) List: $2300, Rent: $2350 (King & Sherbourne) List: $1450, Rent: $1500 (King & Portland)
Investing In Toronto Condos
If you own a condo in downtown Toronto, this is a great time to consider locking into the historic low mortgage rates and take advantage of the high rental demand.
Now is the best time to consider restructuring the condo's mortgage due to the following 2 reasons:
1. Condo values have not dropped significantly 2. Mortgage rates at historic lows
Waiting for the "right time" can be costly especially if condo values drop there will be less equity to take out and when interest rates rise (even slightly), the monthly carrying costs will increase and might result in negative cash flow.
There is a lot of doom and gloom in the media and blogosphere, but there is always an opportunity if you have a long term approach to real estate investment.
To find out if you can refinance and rent your condo, please email Nawar or call at 416.637.3308.