Tag Archives: Investment

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Condo investor checklist : Location, amenities and low maintenance

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Condo investor checklist : Location, amenities and low maintenance

Successful condo investors know that there are a number of key considerations to keep in mind when selecting a property that will reap them a solid return on their investment.

Here is a rundown of what investors should be focusing on in their search for a profitable rental property.

Photo courtesy Activa

Affordability

In the GTA’s increasingly expensive housing market, affordability tops the list of considerations for investors. A condo unit should be purchased at a price you can afford to carry, and you’ll need to consider condo fees and property taxes alongside sale price.

Also keep in mind the costs of routine upkeep for the property, particularly as you begin renting it out, and the potential for damage rises (hopefully it’s minor.) Speaking of damage, you will need to cover the cost of insurance for the condo unit; this is required by condo corporations.

Make sure you’re doing a cost benefit analysis of all of this to be certain that the rental income you get not only covers your carrying costs but also provides a bit of profit on top. The goal is to be cash flow positive, but it might take a year or two to get there.

Low-maintenance

Be mindful of a property that will require maintenance outside the routine needs, such as lawn mowing or snow shovelling. Buildings with swimming pools, for example, will have higher maintenance and common element fees down the line, which will cut into the rental income potential for the investor.

Room to grow

Space is a key consideration, especially with more families looking to live in condo properties versus actual houses, which are getting out of most people’s price range — buyers and renters alike. Two-bedroom, two-bathroom rental units with parking and storage will see greater demand from tenants who are willing to pay higher rental rates in order to have more room. If buying close to university or college, larger units can accommodate more residents, which helps students share the monthly rent.

Location

The essential element in the assessment of any condo property’s potential. The condo will have much greater value as a rental unit if it is close to transit, universities and colleges, and retail offerings. It should be noted that many new condo developments — such as the Regent Park revitalization in Toronto — are helping to reshape communities for the better. And the value of condo units in these areas is seeing significant growth as a result.

Jobs

Nearby employment opportunities should be a key consideration when assessing whether a condo unit will carry greater value as a rental property, such as locations that are close to work nodes. Basically anything in downtown Toronto, where much of the younger talent is flocking nowadays, will generate a stronger rental income.

Amenities

Amenities are definite value-add when it comes to rental properties. Gyms, party rooms with catering kitchens, front desk/ concierge service, bike parking and storage — all of these will translate into higher rental rates. The same is true for community amenities. A building will see far more renter interest if it’s close to parks, trails and libraries, with a variety of nearby shopping, dining and entertainment options. And that increased demand will mean more rental dollars.

DEBBIE COSIC, CEO and founder of In2ition Realty, has worked in all facets of the real estate industry for more than 25 years.

In2ition.ca

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THE SALESMAN : What to look for when buying an investment condo

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THE SALESMAN : What to look for when buying an investment condo

By Dan Flomen
Empire Communities

Buying a new condominium is the largest investment anyone will make in his or her lifetime. It’s a purchase that will come with almost a lifetime of mortgage payments and monthly maintenance and tax bills.

So why is that most people spend less time reviewing the paperwork on this buy than the paperwork when purchasing a television or car? In fact, countless people buy new condominiums and never take the paperwork to a lawyer. An equal number of people don’t even take the time to read the paperwork themselves.

It is of no surprise to many on the building side that on closings so many of these people are surprised by what they deem the hidden costs of buying and the surprising terms that they “never knew.” The truth of the matter is that almost all builders fully disclose all closing costs and terms in the agreements. In fact, the new home warranty program (Tarion) has regulations specifically calling on builders to outline all the closing costs a buyer will have to pay. Where this is a fixed number, that amount is disclosed. Where there is a possibility of an unknown cost — such as the exact amount of realty tax — the method of calculation is also spelled out for buyers. To fully understand where to look, a buyer must first understand the major sections of any Agreement of Purchase and Sale.

A condominium purchase in Ontario comes with an automatic conditional period. Known as the “cooling off” period, this 10-day time frame in which the buyer can cancel starts from the date at which the buyer acknowledges receiving both an executed and accepted Agreement of Purchase and Sale along with the condominium document and disclosure material. The 10-day period allows the buyer to familiarize themselves with both these agreements.

The condominium documents will have a section called the budget, which is critical for a buyer to review. It will spell out the maintenance fees specific to both the subject unit — and all units in the building — and lays out how the fees were calculated. A buyer should read this section carefully as it will show potential future issues, such as escalation rights of the maintenance fees if the building is not completed by a certain date. It will also indicate how the builder and property manager intend to maintain the building. If this number seems low you should ask the builder how this cost would not escalate.

The other important items are to understand is the rules and regulations, which will help you understand your rights towards leasing if bought as a long-term rental investment. Very few buildings allow short-term rentals, yet more and more we are seeing Airbnb listings contrary to the rules. If you are caught doing things contrary to the rules you should be aware of the condominium’s right to a forced sale.

The Agreement of Purchase and Sales will almost always have a section called Adjustments. This will outline many of the extra costs that a buyer will have to come up with on closing. These include items such as meter installations, law society fees, increases in development charges and parkland levies, taxes that are not included and the cost per deposit cheque for the solicitor to deposit in their trust account.

It is rare for a builder to waive these but many will put an upper limit on any variable ones. This is more of a personal decision than a legal one.

Take the time to understand all these costs and speak to your accountant for a better. Above all, it is also important that you speak to your accountant to understand the HST implications upon buying a new condominium. HST is often not included in investment properties but the government has some programs to refund most of the money once the unit is leased. On closing, however, you may be hit with a large HST bill.

This all may seem scary but in the long run the condominium markets, especially in the GTA, has provided returns that makes good business sense. Take the time to read your paperwork. Understand the downsides, but when weighed with the potential upside, take a leap of faith if you feel the buy is right.

Dan Flomen is senior vice president, sales, at Empire Communities. https://empirecommunities.com/

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Home Realty: Buying With Students In Mind

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Home Realty: Buying With Students In Mind

Condos near schools, transit are rock-solid investments

With the current cost of real estate pricing so many young people out of the market, it’s becoming increasingly common for parents to help their kids by purchasing them their first condo. Especially when that child is heading off to school and will need a place to live.

Buying your child a condo for their college years provides a dual benefit: your offspring avoids having to pay rent when they’re at school (which you’d likely be bankrolling anyway), and the family then has a solid long-term investment for its portfolio, with the tremendous and ongoing upside as a rental property for other students down the line.

When it’s young people who will be condo’s occupants, the criteria for what constitutes an ideal unit changes than if you’re buying just for yourself. Perhaps most important on the must-have lists for students are locations that are well served by transit and close to quality post-secondary institutions.

For example, Parkside, Amacon’s 23-building mega-project in Mississauga City Centre — the city’s largest condo development — has enjoyed unparalleled success with investors and end users thanks in large part to its proximity to Sheridan College. And a number of residential projects are cropping up around the new TTC subway extension in Vaughan, a huge boon for York University and its students, which have been seriously under served in both the housing and transit departments. It’s the same situation in Markham, where York University has announced plans for a satellite campus.

One28 in Waterloo caters to students.

Condo projects in these transit oriented areas are selling out mere moments after launching, speaking to the insatiable demand for modern and well-appointed student accommodations.

A new project in Waterloo, One28, is located just minutes from Wilfred Laurier University, the University of Waterloo and the UW Technology Park. The 15-storey complex is unlike other typical student-targeted developments, boasting beautifully appointed and luxurious one-bedroom and two-bedroom suites that promise a completely new experience for residents looking to live in Waterloo’s university area.

Projects like One28, which are catering to younger buyers, must have an attractive amenity package, including fitness centres, yoga rooms, activity areas, communal spaces such as party rooms and rooftop lounges, and sustainable features like electric vehicle charging stations and bike storage lockers.

Just a note on tax implications: if parents rent out a unit at market rates to a student family member who uses the property as his or her principal home, they can deduct tax losses from the rental activity, deduct the mortgage interest and write off all the other operating expenses, like utilities, insurance, association fees, repairs and maintenance.

Whether you’re purchasing a unit for your college-bound child, or you’re a savvy investor buying a unit to rent out to students, you can’t go wrong with a condo as an investment property.

Prices have been steadily rising, and many of those who can’t afford to get onto the ladder will be looking to rent for the long-term, making them ideal tenants for these investment units. Best of all, when students are the target demographic, there’s plenty of future potential in a market that continues to clamour for quality housing options.

Debbie Cosic, CEO and founder of In2ition Realty, has worked in all facets of the real estate industry for over 25 years. She has sold and overseen the sale of over $15 billion worth of real estate and, with Debbie at the helm, In2ition has become one of the fastest-growing and most innovative new home and condo sales companies. In2ition has received numerous awards from the Building Industry and Land Development Association and the National Association of Home Builders.

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