Everything You Need to Know About Investing in the Toronto Real Estate Market

January 11th, 2021

Toronto Condo Skyline

Real estate is an extremely lucrative market. Investing and getting involved in the market seems simple in theory, but the reality is that there’s more to it than meets the eye. Having a clear goal in mind and knowing what methods you’ll use to approach this can make or break your success.

If you’re ready to take a leap of faith and tackle real estate investing in Toronto, read on for the top three tips that we recommend you keep in mind.

Outline and Understand Your Goals

As straightforward as this seems, many investors forget how important this step is and don’t stop to consider what goals they may have in mind. Investing in the real estate market can be broken down into two strategies based on your end goal. Are you looking to build equity or perhaps to develop another form of cash flow coming into your pocket each month?

Either one of these is a great starting point for anyone, and both these strategies can be used in tandem with one another.

Building Equity 

It’s a common understanding that properties appreciate. In short, that’s what an equity gain is. You profit on the appreciation of the property when you decide to sell it or, in real estate terms, “flip it.” Without getting into the nitty gritty on tax implications, it’s recommended that you play the long-term game for an equity gain.

Approaching your real estate investment with an equity play is a great way to make a good chunk of change in Toronto. Year over year we’ve been seeing a steady increase in the Toronto condo market. As with anything, proper research on the market in Toronto will help set you up for success and some serious cash in the long run.

Developing a Form of Cash Flow

You now have a condo in your hands. It’s building equity, but what do you do now? You don’t want to pay out of pocket to keep the place running, or, worse, put yourself in a hole. The best method is to generate cash flow by renting it out.

A great place to start here is to do some research on what the average rental price is for some of the condos in your building.

Remember, you’re also building equity as the property is being rented out. So, why not take advantage and put both these strategies in play?

Man calculating his monthly mortgage before investing into a Toronto Condo

Higher Premiums

Let’s say you’ve decided on renting out the condo to get some money coming in monthly. How do you maximize it? There are a few ways you can get creative to help reduce your mortgage amount, allowing you to charge a premium.

Larger Down Payment

Making a larger down payment on a condo will help reduce the monthly mortgage you’ll need to pay. In most cases, if you make more than a 20% down payment, you can qualify for a 30-year amortization period. This allows for a cheaper mortgage amount, but the cool thing is that you’ll pocket more money every month.

Numbers, Not Emotions

We understand that your new property is a rental property and you want it to look good. But realistically, you must approach it with the mindset that it’s a business and your sole goal for this is to collect a cash flow or collect equity. So debating if the upgraded hardwood floor is better than what you currently have isn’t worth it.

husband hugging wife from behind in their Toronto Condo

Rental Properties Are on the Rise 

Renting a property in Toronto has been on the rise for years. As condo prices increase, it has been difficult for new families to get into the market and to own a property right away. One of the quickest ways for someone to acquire a place is just by renting.

As more high-profile companies set up shop in Toronto, many people choose to rent their condos in the city to save on costs. Leverage the growing market to establish a portfolio for yourself in the long run.

We know making the first investment is hard, but did you know that real estate is becoming a bit more affordable? Learn about How New Townhomes & Condos Increase Affordable Housing in Toronto

Investing in Toronto condos is a great way to make some money, whether that be long-term investment or cash flow coming in monthly. Regardless, before you jump in the deep end, we recommend getting advice from a realtor – that way, you know you’re playing by the rules. Are you interested in investing in the Toronto real estate market? Join us on our social media pages (Facebook, Twitter and Instagram) and let us know!