With all the changes happening in Toronto’s real estate scene—interest rates reaching new highs and the recent slowdown in immigration targets—it’s natural to wonder: Is investing in Toronto real estate still worth it?
In short, the answer is yes. In the long run, these shifts could create a safer, more stable market for investors focused on the fundamentals.
Without high immigration rates and ultra-low interest rates driving up prices, we’re seeing a move toward more balanced growth. This shift favours value-add strategies over speculative buying, making it a great time to look at Toronto with fresh eyes.
Limited Land and High Demand Fuel Long-Term Appreciation
Toronto is Canada’s economic hub and a magnet for people nationwide.
This constant demand, coupled with limited land availability for new builds, creates a strong base for property values to appreciate over time.
Unlike smaller cities, where space for expansion is more plentiful, Toronto’s dense layout makes each property more valuable.
Why Value-Add Properties Make Sense in Toronto
Instead of relying on unpredictable market appreciation, focusing on value-add projects offers more control over your returns. Toronto properties may be pricier, but construction costs are fairly consistent across Ontario.
This means your post-renovation lift—the increase in property value after upgrades—can be higher in Toronto because property values are already elevated.
Example:
Imagine buying a semi-detached home in Toronto for $1,000,000. You invest $150,000 to convert it into a triplex, bringing in around $7,000 a month in rent. Using a 5.5% cap rate, this renovation can boost the property’s value by $160,000, delivering a 100% ROI on construction costs.
Now, compare this to Windsor: a similar property may cost around $450,000, with the same $150,000 conversion yielding $5,000 in rent. Due to Windsor’s higher cap rate of around 7%, the lift would be closer to $85,000—half the ROI you’d get in Toronto.
Zoning Flexibility: More Units, More Potential
Toronto’s zoning policies are another huge advantage. The city allows greater density on smaller lots, meaning you can add more units to a property compared to other areas.
Ontario’s recent zoning update permits up to three units per lot, but in Toronto, you can build up to a 4+1 setup (four units plus a backyard suite). That’s five potential income streams on a single property, something you won’t easily find elsewhere.
Toronto also waives development charges on properties with up to four units, and there are no parking requirements, making it easier for investors to boost their returns. And with new financing programs, like CMHC’s construction financing for secondary suites, smaller projects are more accessible and lucrative than ever in Toronto.
If you’re looking at larger projects with five or more units, Toronto’s zoning flexibility allows for even better cash flow potential and lift. More units per lot translate into more income, and refinancing through commercial mortgages like the CMHC MLI Select can help you scale up faster.
Back to Basics: Cash Flow and Value-Add Potential
With immigration cooling and market appreciation less predictable, sticking to fundamentals like cash flow and value-add projects is crucial.
Converting a single-family home into a triplex or buying a multiplex property in Toronto allows you to earn steady income and add value, positioning you to succeed in any market conditions.
How We Can Help
If you’re curious about Toronto’s value-add opportunities, reach out!
We’re more than just a real estate brokerage—we’re seasoned investors who know Toronto’s multiplex market inside and out. Whether you want a turnkey rental or a property to convert, we’ll help you every step of the way.
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!
