Introduction
Looking to score the best investment property in Toronto?
Rents and appreciation can vary drastically from one neighbourhood to the next. While predicting appreciation is a tricky game, focusing on rental income is a safer bet for stable returns.
In this video, we’ll break down the top Toronto neighbourhoods with the best rental yields for 2024!
Predicting Appreciation Potential Is Tricky
Here are a few reasons why:
- One big sale can throw off the data.
- Timing is super important. For example, comparing growth from 2014 to 2024 versus 2019 to 2024 can show completely different results – so it does depend a lot on when you buy and when you sell.
- Plus, just because a property did well in the past doesn’t mean it will in the future.
- Another thing to consider is that TRREB areas are still too broad, making it tough to get nitty gritty details about each neighbourhood.
Comparing Toronto Investments Based On Rents
A safer bet for choosing where to invest is to focus on rental income, which is a more predictable and stable source of return on a monthly basis.
Rents vary across Toronto and are linked to property prices. Higher rents usually mean higher property values, so you can’t just look at rental income alone. Instead, compare the rent to the price to get a clearer picture.
A key metric for real estate investors is the cap rate:
Toronto Neighbourhood Cap Rates Ranked!
The good thing is that all of this data is available from TRREB and we did the hard work to crunch the cap rates for 3 unit detached multiplexes for various neighbourhoods in Toronto for Q1 2024 and ranked them from best to worst.
Keep in mind that these are rough estimates only and cap rates will change over time too. Typically cap rates are higher when interest rates are higher, and if interest rates come down which is pretty likely coming soon, cap rates will come down.
So basically, we’d recommend using this as a guide to steer which areas to invest based on cap rates instead of using this as an actual measure of what returns will look like.
You’ll notice that rents in Toronto don’t change as much as property values, which can swing a lot more. So, when you’re investing in a cheaper neighbourhood in Toronto, chances are you’ll get better cap rates in general.
And I say “in general” because it can be very deal specific. For example, your cap rates will improve if you have more density on your lot, like having a deeper footprint or a taller house. You can get discounts when you buy on a Main Street or buy one that needs fixing up, and that can also bump up your cap rates too.
Other Factors To Keep In Mind
Appreciation still matters, which is why we invest in Toronto because Toronto’s long term appreciation has proven to be very strong.
You might find better cap rates in rural Ontario, but if there’s no price growth, Toronto could still be a better investment. This idea also applies to different neighbourhoods within Toronto – it just gets more subjective and each person can have a different take on this.
On top of this, demographics can also be important for some investors. Some might prefer higher-income neighbourhoods and tenants, even if it means accepting a lower returns.
How We Can Help
Since everyone’s got different goals and needs, what’s considered “the best investment in Toronto” can really vary from one person to the next.
But here’s the good news: if you’re on the lookout for a Toronto real estate brokerage that can help you crunch the numbers and make decisions based on solid facts, well, you’ve found us!
We’re a real estate brokerage that specializes in buying and selling freehold investment properties in Toronto. Whether you’re eyeing a ready-to-rent multiplex in Toronto or need a coach to help you turn single family homes into multiplexes, we can help.
We’ll start by getting to know your situation, teach you the basics and then eventually guide you to buying the best Toronto real estate investment for your goals.
Ready to dive into Toronto real estate investing? Just head to this link below, and let’s make it all happen!
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
