Trying to decide between buying a condo or a house in Toronto?
With the same amount of cash—$175,000—we’ll walk through a few options to see which setup gives you the best cash flow, manages debt more effectively, and offers the strongest returns.
Scenario A: Condo vs. House Hack with a Basement Rental
Let’s start with the basics. You could put 20% down on a 2-bedroom condo for $750,000 or use that same amount to buy a $950,000 bungalow where you live on the main floor and rent out the basement. Here’s how the numbers look:
- Condo: You’ll need around $175,000 down and qualify for a $600,000 mortgage. Monthly costs come out to $3,748.
- Bungalow: Down payment is about $225,000 with a mortgage of $760,000, and monthly costs drop to $2,347 since basement rental income offsets some of the expenses.
When you look at Year 1 returns, the house-hack setup (renting part of your home) actually performs better than the condo. This setup lets you build cash flow and equity, so it’s a stronger option here.
Scenario B: House Hack with Lower Down Payment
What if you could stretch your mortgage to put less down on the house? If you go with 15% down on the bungalow, you’re still in for about $175,000 cash upfront, but your mortgage increases to about $800,000. Here’s what that looks like:
- Monthly Cost: The bungalow costs around $2,573 per month—still lower than the condo at $3,748.
- Income Requirement: With this larger mortgage, you’ll need around $140,000 annual income to qualify.
With these numbers, the house hack still outperforms the condo on an annual basis as well, making it a better choice for maximizing cash flow and returns.
Scenario C: The Ultimate House Hack—Multi-Unit Semi with 3 Rentals
Now, let’s go a step further. Imagine buying a two-storey semi-detached house for $900,000 (similar price to the bungalow due to a smaller lot and attached wall) and putting in $150,000 in renovations to convert it into a 3-unit property. You’d live in one unit and rent out the other two.
- Finances: You’d still need around $175,000 upfront, but you’d be taking on a $1M mortgage, so you’d need an income of about $170,000 to qualify.
- Monthly Costs: Here’s the cool part—your monthly costs drop to $1,186. Even though it’s a bigger loan, it generates enough rental income to cover most of your costs.
This setup gives you positive Year 1 returns. Basically, you’re banking your mortgage payments as equity, making it like a “mortgage piggy bank.” Over time, you’re building value and essentially living for free while gaining equity.
New Government Insurance To Finance Construction
Starting January 15, 2025, new government programs will make financing for multi-unit properties even easier.
If you’re living in one unit, you can access loans up to $1.8M, and additional financing (for projects like renovations) can’t exceed project costs.
Note that the property can have up to 4 units, but you’ll need to own it first—so starting your search now makes sense since Toronto closings typically take around 2 months.
How We Can Help
Curious about these strategies? Let’s chat! We’re more than just a real estate brokerage; we’re seasoned Toronto investors who understand multiplex strategies. Whether you want a ready-to-rent property or one with potential for conversions, we’re here to help.
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 & Purchase: 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!
