Investing in Toronto Condos in 2019-2020
Toronto Real Estate Investing strategies is what we all need to focus on these days. The Toronto Real Estate market is moving quickly. Prices are going up. It does not matter what “economists” say. Government’s “actions” are useless. The hunger for Real Estate is real and investors want a piece of the Toronto Real Estate pie as soon as possible.
When we look at the appreciation for Toronto Condo in the past years, we discover that the velocity is increasing all the time. Why is that? The main reason is always the same, Real Estate is deemed one of the safest investments one can hold. It provides security – roof over your head. It provides income via rents you collect. It provides appreciation – a hedge against inflation. Can you find another investment that an do that?
No. You cannot.
How Appreciation Works
Lets take a typical Toronto condo as an example:
- One plus Den
- 600 sq ft
- Purchased in 2015 for 600/psf
- Purchase price $360,000
- Deposit 20% or $72,000
- Today’s rents approx. $2,200/mo.
Now, lets look at the sae unit in 2019:
- Valued at $1,000/psf
- $600,000 value
- For good measure, lets discount it a bit
- Value at $560,000
- $560,000 – $360,000 = $200,000
- ROI $200k/72k = 277%
- Over 4 years: $50,000/yr
- 277%/4 = 69.5% per year. Crazy!
Insane Returns on Investment
277% in four years is an INSANE ROI and there are many investors who have achieved that or better. Of course there are many investors who have not done as well (not my clients!). They have bought the wrong units in the wrong projects and paid too much.
Toronto Real Estate Investing Stragtegies
There are several strategies you can take. Let me cover them here in bullet point form. If you’d like to know more, contact me and we can chat on the phone or meet and discuss in person (my favourite). Here they are:
- If you can invest today, invest today
- Find properties that are within your budget
- Don’t worry about what you can no longer afford
- Take immediate action. Tomorrow is more $$$
- Ask me to show you cheaper deals and assignments
How Long Can This Keep Going?
One of the best methods I use to evaluate future appreciation is to look at the affordability. That means, how much money you need to make in order to own or rent a Toronto condo. Back in the day, say 20 years ago, average condos were sold for $99,000 to $135,000, they were 700 sqft. one bedrooms and the price barely increased.
Today, your typical condo is 500 sq ft and it appreciates by ten to twenty percent a year.
Salaries have barely increased. Your typical corporate salary increases by a meagre 2-3% a year. That’s not enough to cover for inflation… you’re basically losing money bc you work the same and your salary buys you less and less every day.
Until… one day… you find that you can no longer afford anything in Toronto You need to look outside the city – which many are doing now. You have been priced out of the market, for good.
You are going to be a forever renter if you stay in Toronto.
Those who were smart enough (and had the means) to invest earlier, can still stay in town. How many people you know that say, ” if I had to buy today I would not have been able to do so”?.
What to do when you’ve been priced out?
if you are new to investing, or were unable to purchase when priced were lower, or did not believe this is coming, you are now priced out.
But wait! There is a solution. The answer is for you to invest where you can – find a good quality project like 33 Jarvis St. in Brantford and by there.
No, you do not have to move anywhere, you can own outside Toronto and still live in Toronto.
But if you do not invest now… this will happen to you again… until you have taken action or given up.
What You Should Do Now:
If you are thinking of investing, flipping or selling to free up capital, give me a call and we’ll discuss your situation. There is much information that I can tell you but not post online. That is where the real deals happen – not behind a computer… but in person… use the contact form below to get in touch. Thanks and good luck all! Yossi.