How good is investment in a condo in Toronto under the current market conditions?

Wealth, the thing that each person in the world desires the most. Everyone wants to be wealthy irrespective of why they want to be wealthy investment. Some wish to escape death while some wish to use wealth for something innovative (a new scientific discovery and the like) while some prefer a luxurious life free of worries.

How do people make wealth? Through their work, business, business venture or investment. Some win the lottery, some rob banks, steal money or do activities that can be either legal or illegal in nature. It does not mean that wealth generation is illegal, it is perfectly legal and can be made through sustainable ways too.

In Toronto, being wealthy is the dream of every Canadian whether native born or immigrant, and there are a lot of ways for anyone to be wealthy. Some work hard and smart, some become stars in entertainment, politics, sports and the like, some strike gold through the lottery while some gather some money and buy real estate.

Real estate has always been one of the best modes of investments anyone has ever witnessed in their lives.

Toronto is now becoming Canada’s most expensive real estate market and has become more expensive than Vancouver. In fact, it has earned a ranking on the stressed housing affordability index which is a sign of concern.

Yet, the market has been quite stable and rental properties are rising in numbers. Yet, the preference of most buyers is to purchase properties, either through mortgage or direct payments. Now lets see why real estate is a good investment worth pursuing.

How good is real estate as a mode and form of investment?

When it comes to investing well-earned money, there are two options the typical Torontonian will follow, either invest it in the stock market, or invest it in real estate. Is real estate worth investing in? The answer is yes. Affordability is a factor worth considering as Toronto’s real estate is now expensive.

Toronto’s real estate market has proven over time that it has produced more steady growth and has also proved its stability. It is a more stable investment in comparison to the stock market. Hence, Canadians must ask themselves how much return their traditional investments generated over the past ten years in comparison to their home?

Those who purchase an investment property in Toronto are investing in real estate and this is a tangible asset. A company’s shares are not tangible and in terms of value, they can go down sharply due to adverse business and economic conditions. 

Real estate is a long-term investment; meaning it stands for long term growth. Even if real estate prices take a sudden plunge, these prices get back on track and climb up in the long run.

When the numbers are put together, it proves that investing in Toronto’s real estate has the potential to earn the investor ten times more the amount company shares and investor bonds can give because real estate investment is made in large assets.

Let’s consider a simple example: an investor purchases C$ 10,000 worth of stocks and the market goes up 10%, they earn a return of C$ 1,000. It is because shares are like securities and they yield a certain percentage of returns. Shares are also known as liability products 

But in real estate, the situation is different. Since it is an asset, an investment of C$ 40,000 on a property that is worth C$ 400,000, with the market rates rising by 10 percent; the return the investor gets is C$ 40,000.

Real estate investments are investments of low risk and high returns. Since the gains are made on the asset’s complete value, the dollars invested go a long way up.

Is investment in a condo a good real estate investment mode and idea this year?

In terms of investing in Toronto’s real estate, the biggest gains are in the condo market. The prices of Toronto condos have risen on an average of 13 percent annually since 2015. When investors examine local data, they will realize quickly that different areas of the city perform better than others. 

The average 10-year historical growth rate of Toronto has been 5 percent annually. In recent years, it averaged 10 percent annually. Investing in a condo in Toronto now means investors get it at today’s rates.

The city’s international profile is joining the likes of major cities across the world especially New York, Chicago, Frankfurt, Tokyo, Yokohama, Sydney, Paris, London, San Francisco and Los Angeles. At the same time, its property market is more expensive than San Francisco but a bit below New York City, Tokyo and London.

What do real estate experts say?

Real estate experts in Toronto are of the view that the best time to invest in real estate is today. Why? Because the longer an investor waits, the less their money is worth. THis is all because of Toronto’s market.

How can investors make an investment in a condo in Toronto?

Here are a handful of tips that can come in handy when investing in a condo in Toronto:

Working with an agent who is also an investor

When the real estate agent is also an investor, this helps real estate deals become one of the best investments made. Since experienced agents recognize real estate’s value due to investments made, these professionals can help guide clientele in making the right move and avoiding properties that are undesirable.

Searching for the best deals on condos in Toronto

When buyers purchase a condo in Toronto as a mode of investment, they should do so in a strategic manner. They should not be attracted by waterfront condos. Rather they should look for those having the best margins and can be found in both the pre-construction market and the resale condo market.

How can investors find the best deals on condos in good old T-Dot? Here are some ways of doing so:

 

The agent’s buyers work with are the real deal in this matter. When it comes to the resale market, working with an agent with a good understanding of the buildings and floor plans that yield desirable return on investment (ROI).

In the pre-construction condos market, agents having platinum access to projects throughout the Greater Toronto Area are the best to work with. They give clients preferential access to the best floor plans and to the best available prices.

The best inventory hardly reaches the open market because new buildings when launching sales sell the best ones to agents with Platinum access.

The power of leverage should be used

Investing in real estate is one of the few things anyone can buy without the need to pay the full price. Usually, a property’s purchase requires around 20 percent down payment. This means that anyone having C$ 100,000 to spend can purchase a property worth C$ 400,000. The equity growth is based on the asset’s full value.

The reason why people can make wealth via real estate is through leverage. Those who own a home are able to borrow up to 80 percent of their home’s equity for a low-interest rate. THis is known as Home Equity Line of Credit (HELOC).

If investors can leverage a portion of their home’s equity into a second condo investment, they will hence be able to create their own portfolio. This eventually provides them with two properties creating equity in the market.

Why is a good condo investment strategy important?

Investment in Toronto’s real estate market does not use the ‘one size fits all’ plan. An experienced realtor with a great understanding of the investment process is one of the best ways to ensure buyers are making sensible investment decisions. They will give investors guidance on boosting their return and equity beyond the expected market growth rate.

Their advice and guidance in helping buyers create their real estate portfolio. It will depend on what investors have at hand and will largely depend on market trends. They should be looking for margins and market opportunities actively matching clientele’s abilities and needs i.e. should help them buy the right property.

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vickyrathore
Vicky Rathore is a writer, and blogger. During the past 10 years of professional writing, He likes to write on the following topics: Home, Lifestyle, Health, Entertainment, Technology, Travel, Business & more.
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