Does it still make sense to invest in Toronto real estate? Interest rates are finally starting to come down, but with a shaky economy and reports of a buyer’s market, you might be wondering what’s really going on.
Is now the right time to buy Toronto real estate, or should you wait? Let’s break it all down.
What’s Happening in the Market Right Now?
Home prices in Toronto are still falling because many people are waiting for interest rates to drop even further. In this stagnant market, there’s less excitement, and buyers are holding back.
But here’s the thing—waiting for Toronto real estate prices to rise before investing isn’t always the best strategy. With fewer buyers competing, this could be the perfect opportunity to make smart decisions without the stress of bidding wars.
The Population Is Growing, and So Are Opportunities
Toronto’s population is growing fast, and housing supply just isn’t keeping up. The city is encouraging more density in neighbourhoods, pushing for multi-unit properties where there used to be only single-family homes.
This policy shift creates an excellent opportunity for investors. By converting or developing multi-unit properties, you can increase your cash flow while spreading out your risk across multiple tenants.
Renovations Are Adding To Price Growth
Another key driver of rising home prices is renovations.
During the pandemic, many homeowners spent money upgrading their properties, and those renovations helped boost property values. If you can renovate a home for less than the value it adds, you stand to make a solid profit.
However, it’s crucial to focus on cost-effective renovations that give the best returns. Working with experts who understand the market can help you make the most of these opportunities.
Leverage and Financing: A Smart Way to Boost Returns
Leverage is a huge advantage in real estate. Borrowing money to buy property can significantly increase your returns, especially if the property is cash-flow positive. Just note it does go with ways – when times are good, your returns are magnified; when times are bad, your losses are also magnified.
Here’s an example:
Say you buy a Toronto house for $800K and invest $100K in renovations, bringing its value to $1M. Renting out three units for $6,700 a month would bring in $67K annually. That’s a 7.5% return before considering any appreciation.
If you finance the property with a mortgage with a 20% downpayment, you could still generate $29K in cash flow, while putting down less than $300K upfront.
Plus, after renovations, refinancing could pull out some extra cash, leaving less of your initial capital in the deal.
The Bottom Line
Even though the Toronto market feels uncertain, Toronto real estate remains a strong long-term investment.
With Toronto real estate prices lower and less competition, you have more bargaining power to negotiate better deals. Plus, there’s less stress in buying, allowing for thorough due diligence and better planning.
Waiting for Toronto real estate prices to rise might feel safer, but acting now—when the numbers work in your favour—can put you ahead of the curve.
How We Can Help
Interested in learning more? Whether you’re looking for Toronto multiplex opportunities, ready-to-rent properties, or a conversion project, we’ve got the expertise to help you succeed. Reach out, and let’s chat!
We’re a Toronto-based real estate sales brokerage that specializes in multiplex properties.
Here’s what it’s like to start as a client with us:
- Initial Consultation: We’ll talk with you to understand your needs and teach you how to invest wisely in Toronto real estate.
- Market Search: We’ll search the market to find the perfect property for you.
- Renovation Support: If the property needs renovations, our trusted contractors are ready to help, and we’ll coach you as you manage the project.
- Leasing and Management: If you need help renting out and managing your property, our leasing and management team is here for you.
Ready to get started? Click on the link below, and let’s start working together!
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!
