We’re noticing a major shift happening where investors are pivoting from other parts of Ontario to focus on Toronto.
It might be because capital gains getting taxed more so flips aren’t very attractive, plus new policies being all about new construction, so the new strategy is all about long term holds now!
Wondering why the sudden love for Toronto? Let’s break it down with our top 7 reasons.
1. You an Build More Units As Of Right In Toronto
In Toronto, you can build up to 5 units on any lot without jumping through hoops! Yep, that’s right – 4 units in the main house and 1 in the backyard.
No zoning changes, no permission needed – just make sure your lot is big enough and meets fire safety rules.
Now, compare that to the rest of Ontario, where the max is usually 3 units and it’s up to the individual cities to decide what is allowed, Toronto definitely it making it the easiest for investors to maximize density on each lot.
2. You Can Qualify For Better Financing Options In Toronto
With 5 units allowed in Toronto, this opens up better financing options like the CMHC MLI Select: 5% down, 50 year amortization, better rates, easier to scale!
It’s a total game-changer! Better leverage means bigger ROI potential, and that’s why Toronto’s stealing the spotlight.
3. You Can Get Better Rent Yields In Toronto
More units on a lot typically give better rental yields.
As you can see, it’s not only possible to cash flow in Toronto even on refi at post-build market values, but it’s actually significantly better than the average of what’s possible in other parts of Ontario.
4. Development Charges Are Waived In Toronto
In Toronto, there’s no development charges for 4 units, and it’s deferred for the backyard house too. Assuming development charges are around $50,000 per unit, that’s $250,000 saved in build costs!
5. New Units In Toronto Do Not Have Parking Requirements
Here’s the thing: even if you can build 5 units, many cities would require parking on site, so that eats into the build form. Without parking requirements for new units in Toronto, you can get a much bigger build, which is what ends up making the numbers work well.
6. 6 Storeys and 30 Units May Be As Of Right - Coming soon!
30 units on major streets this isn’t reality yet but we’re close. Toronto is working on allowing up to 6 storeys and 30 units on major streets which can make numbers look even better – so keep your eyes on this one if you’re looking into the new housing multiplex space.
7. You have Better Returns In Toronto!
Toronto lots are pricier, but build costs are less for the same type of build because you don’t pay DCs in Toronto. So, the total investment cost isn’t far off from each other, assuming you fund the construction costs upfront.
You end up with better rents in Toronto, and running based on the same cap rate, the gains are substantially higher. Realistically Toronto cap rates are lower, so you have the potential for even better gains!
How We Can Help
Want to know the exact details on how we’ve helped investors turn single-family homes into 5-unit multiplexes in Toronto? Just reach out to our team!
Our Toronto real estate sales team specializes in investment projects like this in Toronto and we can guide you to maximize your real estate investing success in the long run. Just go to the link below to schedule a chat with us!
