Toronto Real Estate Investing Success: Our Complete Guide
With our FREE comprehensive guide to real estate investing in Toronto, you will have access to the tools and knowledge necessary to make informed investment decisions and achieve success in this constantly evolving, yet lucrative investment class.
Everything You Need To Know About Real Estate Investing In Toronto
Know The Differences
Find out how much capital you need, appreciation trends, rent yields & more!
Sample Returns
See typical returns of different types of rental properties in Toronto.
What's Best For You
Take our investment quiz to find out what's the best property for you.
Know The Differences
When it comes to investing in property, there are three common types of investment properties in Toronto: condos, houses, and commercial properties.
Each has its own unique features and benefits, and it’s important to understand the main differences between them before deciding which type of investment property is right for you.
We’ve broken down the main differences between these three types of investment properties to help you make an informed decision.
These are the factors we will look at: purchase price, capital requirements, active management, rent yields & cash flows, market appreciation, and value-add appreciation.
Purchase Price
Toronto condos may have the highest price per square foot compared to other types of properties. However, this is offset by their smaller size, which means that their starting price is generally lower than other options.
The final price of a property is influenced by factors such as its condition and finishes. This also means that if you’re looking to maximize your investment returns, purchasing a property that requires some work may be an excellent option.
While the initial price may be lower due to the necessary improvements, the potential return on investment can be significant once the necessary upgrades are completed.
416 Condo
$XXX,XXX+
416 House
$XXX,XXX+
416 Commercial
$X,XXX,XXX+
Rent Yields & Cash Flows
Condos tend to have lower rent yields and negative cash flow, which can weaken your holding power compared to houses and commercial buildings.
With condos, expenses such as monthly maintenance fees and property taxes, plus your mortgage payment each month can often exceed the rental income generated. This negative cash flow may make it more challenging to hold onto the property for an extended period, especially when interest rates and variable mortgage payments start to rise.
In contrast, houses and commercial buildings may generate positive cash flow, allowing the owner to cover expenses and mortgage payments while generating better rental income. This can provide stronger holding power and enable the owner to weather economic downturns or unexpected expenses that may arise.
Overall, the negative cash flow associated with condos can impact the owner’s ability to hold onto the property for an extended period, making it important to carefully consider the financial implications before making an investment decision.
416 Condo
XXX rents
- XXX operating expenses
= XXX cash flows
416 House
XXX rents
- XXX operating expenses
= XXX cash flows
416 Commercial
XXX rents
- XXX operating expenses
= XXX cash flows
Market Appreciation
Historically, houses in Toronto have demonstrated slightly better appreciation over time than condos. One reason for this is that when you purchase a house, you are also buying the land it sits on, which is currently in high demand due to the housing crisis in Toronto.
This can provide more opportunities for adding value to the property over time, leading to increased appreciation. On top of this, condos can be riskier investments over a shorter investment horizon since there are more investor buyers in the pool, increasing the price fluctuations in this market.
Although commercial properties may experience slower appreciation compared to residential homes, they may have better potential for gentrification growth. Gentrification refers to the process of revitalizing and improving an urban area, often through the renovation of older buildings and the introduction of new businesses and amenities.
Commercial properties located in areas undergoing gentrification may benefit from increased demand and higher rental rates, leading to potential growth in value over time.
416 Condo
XXX XXX
416 House
XXX XXX
416 Commercial
XXX XXX