Better Living For Everyone | Wayne County Housing

It is a well-known fact that with a thousand dollars, you can own a house in Toronto.
Some homeowners prefer buying single-family homes whereas others are inclined to buying condos.
Any seasoned real estate investor will attest to the fact raising funds to buy property in Canada is not an easy thing.

The Advantages and Disadvantages of Investing in a Condo

by Spencer Trujillo November 26, 2018 No Comments

Investing in real estate is a great way to make money. However, investors have to answer many questions before they are ready to buy a property and start renting it out. Many factors have to be taken into consideration in order to land a profitable real estate deal and make a good investment. One of the first questions which real estate investors should ask themselves is: “What property type should I go for?”

One of the popular types of real estate, especially in the hot markets of top cities, is condominiums, or condos for short. Condos are a viable choice for property investors. Nevertheless, as any other investment, they have both positive and negative aspects, which buyers should study carefully before making a final decision.

To help out real estate investors considering a condo for sale, we have put together a list of the advantages and disadvantages of investing in a condo to rent out:

Advantages of Investing in a Condo

Condos Cost Less Than Other Property Types

One of the most important factors for any real estate investor, especially a beginner, is the price of the property. If you are just starting out investing in real estate, you probably don’t have a big budget, so you should stick to an affordable property. That’s why condos are a good option for first-time investors as they generally cost less than a single-family home and a townhouse in most housing markets. This makes the financing of a condominium easier to figure out than the financing of a townhouse or a single-family home.

Buying an affordable property is a major component of a successful real estate investment. The last thing you want as an investor is to invest in a property which you cannot afford to pay for. Then you run the risk of dealing with a foreclosure or a short sale and losing your property to the bank or another financial institution.

Condos Can Be Passive Investments

Many people decide to stay away from real estate investments as they perceive of them as full-time, hard work. While being a landlord is definitely not a walk in the park, condos take away a lot of the responsibilities of a landlord and make investing in real estate accessible to first-timers as well as people busy at their other full-time job.

Condominiums come with a wide range of amenities and services, which means that the property owner does not have to take care of such things as painting the outside, cleaning the pool, mowing the lawn, improving the curb appeal, maintaining the common areas, etc. On the other hand, these are all maintenance works which investors in single-family homes are responsible for. So, condos are a step towards passive income in real estate.

Moreover, because condos offer more amenities, you can charge a higher rent for them than for another property of the same size and in the same location. This means that you get a chance for a better return on investment when buying a condo.

Condos Attract High Demand

Another important factor to consider when choosing what property type to invest in is the demand which you will get from tenants. The higher the demand from renters, the higher rent you can charge, the higher your cash flow, and the higher your profit.

There are two main factors which push the demand for condos up compared to single-family homes or townhouses. First, most condominium complexes are located in the most central locations in hot real estate markets, while houses are typically found in the suburbs. This means that college and university students, professionals, and young families will all want to live in your rental. Location is key for the success of a real estate investment, as all experts know, and condos provide you with an excellent location.

The second reason why condos attract demand from renters is the many amenities such as a swimming pool, a gym, a common area, and others which they offer at a reasonable price. If tenants want to enjoy the same kind of extras in a rental house, they will have to pay hundreds of dollars more each and every month.

These are the aspects which make investing in a condo a smart real estate investment decision. However, investors will also face some downsides which they should keep in mind before going for this property type.

Disadvantages of Investing in a Condo

Condos Can Face Many Restrictions

While condominiums come with a lot of amenities and services, they can also bring along a long list of rules and restrictions. For example, some condo complexes prohibit renting out units altogether and allow only owners to live on site. Other HOAs have very strict rules on when and how exactly you can rent out. For instance, you can rent out a condo on a long-term basis, but you can’t rent out on a short-term basis.

Thus, the first thing you should do before investing in a condo is to check out the rules which apply to the specific building in which you are interested. Make sure that renting out is allowed, and study the requirements. Don’t make the mistake of planning to rent out your new property as a vacation rental due to the high demand in your city only to figure out that this is prohibited after you have already purchased the condo.

Condos May Limit the Potential for Return on Investment

You are planning to invest in real estate in order to make money – that’s the goal of any property investor. That’s why you should consider all ways in which investing in a condo to rent out might limit your potential for return.

First, condominiums tend to generate lower rental income than single-family homes and townhouses in most major markets, according to data from Mashvisor, a US real estate data analytics company. However, this is not necessarily bad news for investors as condos also cost less, so the cash flow from them and the return on investment might remain higher.

Second, when owning a condo, you have to pay monthly fees to the HOA, which might eat into your profit. The way to go about it is to include these fees in the rent you ask from tenants. You have to be careful though to highlight all the extras which renters get from your condo as compared to an apartment or a house in order to justify the slightly higher rent they will have to pay.

Third, condos appreciate less in value than houses over time. This is just a fact, and there isn’t much you can do about it as a real estate investor. Moreover, it’s very difficult to force appreciation on a condo unit because of all the restrictions you face from the HOAs. So, in the long term, when you decide to sell your property, the return you get from a condo will be lower than the return from a single-family home or a townhouse.

As you can see, deciding whether to invest in a condo is not a black-and-white decision. You have to analyze the situation carefully in order to decide if this property type makes sense for you. Most importantly, talk to the HOA in a condominium complex with units for sale to see if renting out to tenants is allowed. Generally speaking, go for a market where traditional, long-term rentals are the optimal rental strategy as they are more likely to be permitted for a condo. Last but not least, select a market with strong real estate appreciation over the past decades to compensate for the fact that your condo investment will not increase so much in value as another property type. With careful research, planning, and execution, condominiums can be a profitable real estate investment opportunity. As data from Mashvisor shows, you can achieve the same return on investment with condos as with single-family homes or townhouses in terms of capitalization rate (or cap rate for short), all for a lower property price.

Daniela Andreevska is Marketing Director at Mashvisor, a real estate analytics tool which helps real estate investors quickly find traditional and Airbnb investment properties. A research process that’s usually 3 months now can take 15 minutes. We provide all the real estate information in easy to understand visualizations.…

Real Estate

A Forecast of the Future Toronto Condo Market

by Spencer Trujillo July 27, 2018 No Comments

Real estate remains an investment segment for the bold. The market is ever shifting from an occasional boom to unexpected busts. Surprisingly, the high-end property markets, such as condominiums seem to be doing well.

Surrounding all these factors are the complicated trade, political, and demographic considerations. With the recent drop in condo listings, we are expecting a repeat of 2018 next year. Provided all arising trade issues are quickly solved, we can expect a rapid economic boom that resembles that of the US.

Current Market Situation

The rapid construction of condos has created a supply increase, just the perfect opportunity for investors to reciprocate. Most of the units under construction are owned by investors of whom a significant chunk are financially negative. This means that they are spending way more in maintenance than they get from rental income. A deeper examination of the CIBC report reveals that the rental income barely offsets the mortgage payments – principal, interest, and condo maintenance fees.

Last year, just about half of all condo sales around Toronto were for rental purposes. The income derived from them might not match the costs derived from ownership. Only 48 percent of all buyers were real investors. The larger majority bought the property through mortgages. However, just as I began, the real estate market is not for the light-hearted. Buying and holding onto condos will prove beneficial down the road has given the rapid rise in property prices.

Price Rises

As of last year, the resale price of the condos was 26 percent, while rental income was on a 9 percent rise. Despite failing to meet maintenance costs, investors experienced exceptional returns on their rental income. On average investors who are charging more rent than they pay out in maintenance expenses get a $360 monthly income.

A Safe Bet

In places like GTA, condos accounted for 80 percent of all the home sales within the area. Other investment brokers told economists that their buyers wanted more than rising values. Some of the investors were open to giving out larger down payments so they can get neural cash flows later. Others would use the losses witnessed to limit their total tax burden. Generally, most investors are not affixed to price appreciation but prefer to reside in a Toronto which is viewed as a haven.

Brokers remained confident that the interest rate charges would remain low while the rents charged on the condos keep rising. There is the consensus that there is no expectation of a dire scenario that will force investors to flee the market. Only issues that might bring about trouble are severe recessions or unexpected 200 to 300 spikes in prices that can rattle the most resilient of investors.

Regulation

Tighter mortgage rules introduced by Ottawa has seen a 33 percent drop in the sales of condos as of the first quarter. Borrowers were subjected to higher costs when trying to gain home ownership. Investors became more cautious after the new rules kicked in. Nevertheless, there remains a good amount of demand in the current market.

Most of the condos are under construction, and factoring them all still cannot meet the demand. For more on why investing in condos is a smart investment decision, look at the best condo units being offered. You can check out their site for more info.…

Guides

Factors to Consider When Buying a Condo in Toronto

by Spencer Trujillo June 12, 2018 No Comments

Some homeowners prefer buying single-family homes whereas others are inclined to buying condos. This disparity is often inspired by personal preferences and the benefits that come with each of these housing units. In Toronto, condos make up a huge fraction of new homes. They are known to be affordable than single-family homes in the same neighborhood. If you are shopping for a condo in Toronto, here are some tips that could see you get the best condos.

Cost

One primary consideration to make when shopping for a condo is the cost. The higher your purchasing power, the easier it becomes to get what you need. If you do not have a lot to spend on this undertaking, you might be forced to compromise certain key features. Most potential buyers with limited purchasing power are often forced to buy preconstruction condos, which tend to be cheaper only that it takes a long time before one moves in.

Value for Money

As much as this might appear to be more or less the same as the cost, the value you get from investing in certain types of properties varies significantly. In light of this, wisdom dictates that buying already build homes offers real value for money. Instead of paying rent or a mortgage for a unit that is still in its preconstruction stage, a condo that can be lived in or rented as soon as it is purchased thus creating immediate financial benefits.

Shared Amenities

Almost every condo has shared amenities that are communally owned. The most important thing to look at when buying a condominium is the nature of amenities. Here, you need to objectively evaluate the facilities in potential condos and ensure they can serve you right. The last thing you need limited parking spaces, swimming pools and swimming pools that cannot accommodate everyone.

Age of the Property

If you are looking for a decent condo, you might be forced to go for an older building. As much the finishes seem dated, some renovation can change this. As such, when buying a condominium, pay attention to the age of the home.…

Finance

Property Financing Tips

by Marcelina Richardson June 12, 2018 No Comments

Any seasoned real estate investor will attest to the fact raising funds to buy property in Canada is not an easy thing. This is especially true when it comes to qualifying for a mortgage with friendly terms. Thus, before buying property in Canada, seeking finance should be a crucial part of your investment strategy. Ideally, the goal here is not just to find a loan; you also need to position yourself as a low-risk client and get friendly rates.

Have a Goal

What are your investment goals? Your mid or long-term investment goals should be clear before you start looking for finances. The type of financial aid extended to anyone investing in real estate depends on the nature of the investment.

For a fact, the loan extended to someone looking for a single-family home should be different from that extended to investor buying an apartment. You need to have a clear goal before you start looking for financing.

Proof of Down Payment

Most banks require proof of down payment before extending a loan. In most instances, the amount should be almost a quarter of the loan amount. Most lenders will also be keen to ensure that the down payment is not borrowed as this could lead to a conflict of interests. Some lenders might also require you should have tangible proof about where you might be getting your down payment.

Details of Other Properties

If you have other properties, you might be expected to share financial details about these properties. This might include things like mortgage statements, property tax statements as well as lease agreements if they are rented. Ideally, the essence of showing this is to convince the lender that you can be able to service your loan.

Work with an Expert

Working with a real estate agent, an insurance broker, or a mortgage professional improves your chances of goes a long way in ensuring you get the best out of your investment efforts. Most of these professional know lenders that offer the best terms and some will be willing to go about of their way to ensure you get the best deal.

Besides the tips shared here, you also need to have a good credit score, proof of income, and some emergency or closing finds to be an attractive client to lenders. Access to finance is a fundamental tenet of real estate financing considering that properties, especially for properties that tend to be relatively priced.…