<p>If you pay off $300,000 of your mortgage, you save around 4 percent interest on that. That works out to close to $1,000 a month back in your pocket. It’s a good outcome. No risk, no work, more cash flow every month.</p>
<p>But what if you invested that same $300,000 instead? Toronto multiplexes are well off their peak prices right now. That means you need less than $300,000 to get into a turnkey triplex in downtown Toronto, and cash flow on a good deal can run over $2,000 a month. Plus you own a second property that grows in value over time. Let’s break down the real numbers on both options.</p>
Why Paying Off Your Mortgage Isn’t the Whole Story
Saving 4 percent on your mortgage is a real win. But in most cases, you can make more by putting that money to work instead of paying down debt.
Take the S&P 500 as one comparison. Over the past 20 years, it has averaged around 11 percent a year. That’s already well ahead of the 4 percent you’d save on your mortgage.
Real estate can do even better than that, but a lot of people assume the opportunity has passed. That’s usually because they’re thinking about real estate the old way, expecting prices to climb 8 to 10 percent a year like they used to. That’s not what’s driving returns anymore, and it doesn’t need to be.
The Real Numbers on a Toronto Multiplex Today
Prices have come down significantly from the peak and have levelled off. There’s also less competition for these properties than there used to be. That combination means Toronto multiplexes are more affordable than most people realize, and cash flow is working better than it has in years.
Here’s an example. Right now you can buy a downtown triplex for around $1.1 million, ready to rent out with no renovation needed. With a 20 percent down payment and closing costs, that runs you around $260,000 in cash, as long as you qualify for the mortgage.
After collecting rent from three units and paying expenses and the mortgage, you can cash flow over $2,000 a month. That’s about $26,000 a year. On top of that, every mortgage payment you make is also paying down your loan, which adds up to around $16,000 a year in equity. And even with a conservative 2 percent appreciation, in line with inflation, that’s another $22,000 a year.
Add it all up and you get around $64,000 a year on $260,000 invested. That works out to close to a 24 percent return.
Cash Flow, Tax Treatment, and Long Term Wealth
From a big picture view, a multiplex can give you better monthly cash flow than what you’d save paying down your mortgage. And unlike your home mortgage, interest on an investment property is tax deductible, since it’s money borrowed for investment purposes.
On top of the cash flow, you’re building wealth two other ways. Your tenants are paying down your mortgage for you every month, which works like a forced savings account. And your equity keeps growing through long term appreciation, even at a conservative rate.
None of this requires prices to shoot up the way they did years ago. It just requires a property that cash flows well today, in a market where that’s more achievable than it’s been in a while.
Is a Multiplex the Right Move for You?
It’s not the best option for everyone, and we’ll be honest about that. If you want fully passive returns, stocks are the easier road, and they’re still a strong use of your $300,000.
But if you want a mix of cash flow and stronger returns, and you’re willing to put in some extra work, a multiplex is worth a serious look. It’s a more hands on approach, but it comes with real upside that passive investing can’t match.
Most of our clients buy multiplexes to build long term wealth. For a lot of single income households, it’s also a way to supplement family income at the same time.
Whether paying off your mortgage or buying a multiplex is the smarter move depends on your own numbers, your risk tolerance, and what you want that money to do for you. There’s no single right answer, but there is a right answer for your situation, and it’s worth working through with real numbers before deciding.
If you want to run through the options for your personal situation, let’s chat. We’re a sales brokerage that focuses on Toronto multiplex investing. What makes us different is that we’re multiplex investors ourselves, which helps us pinpoint the right strategy for where you’re at, then connect that strategy to the right properties.
Our brokerage specializes in Toronto multiplexes. We’ll help you find deals, crunch the numbers, and guide you through renovations and management. If you want full support in Toronto multiplex investing, our team can help you:- Find high-potential properties
- Crunch the numbers so you know exactly where you stand
- Coach you through renovations to maximize returns
- Lock in great tenants
- Provide full property management so your investment runs smoothly
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!
This is for educational purposes only; it does not guarantee future performance or serve as financial or tax advice.
