A Few Things You Need To Know As A First-Time Condo Investor
Toronto has become one of the world-class cities known for great job opportunities and high quality of living, ranking high on lists like The Most Livable Cities or World Happiness Report. Toronto’s population is one of the fastest-growing in the country, partially thanks to the influx of immigrants who immensely contribute to a strong and busy real estate market. This is a positive sign for condo investors who can either count on the appreciation of their property over the years or a nice extra income in the form of rental. If you want to dip your toes into condo investments, too, here are some tips to help you start out.
What Can You Expect As A Landlord And A Reseller?
Rents have gone up as a consequence of the lack of supply and the preceding price hike in the resale market. The vacancy rate in the rental market is record-low, standing at around 1%, despite high rents, and the competition is so fierce that tenants often offer cash for several months upfront to get a condo. For you, as an investor, this is a guarantee that your condo won’t sit empty. Plus, you are entitled to raise the rent on an annual basis.
If you decide to sell the investment condo after adding value to it (upgrades like new appliances, replacing the floor, etc.), you can expect a positive return, but to get there, you’ll need a lot of money in the beginning. The mortgage, various fees, the upkeep and renovations should be carefully planned and in no way push you to the edge financially. The best policy is to buy as much house as you can afford at the given moment without counting on any future sources of income as they may slip through your fingers and leave you house poor.
Getting A Mortgage
Getting a mortgage for the second home is going to be different than when you bought your primary residence. Lenders usually require a minimum 20% down payment for second homes, and you won’t be able to qualify with anything lower than that.
Rather Invest Sooner Than Later
We’ve seen the interest rate go up by 0.75% in the past 10 months, but it’s still considered low. Canada’s economy has grown stronger and the interest rate is likely to go up again. The earlier you invest, the less you’ll have to pay in interest in the long run. This basically means the best time to invest is now.
Pick A Desirable Property
The most desirable properties are usually found near major amenities like business hubs, schools, universities, public transit, etc., so you should always start from the location. People are usually looking to live close to work, nursery schools/schools if they are parents, malls and gyms, etc. It’s always better to buy a condo in need of repairs in a top location than a polished up condo in a bad neighbourhood, even if the first one is more expensive.
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