Toronto Condos - Mortgage rate

[princecharles]

Hi all

My good friend in Toronto is a renter, so I am considering buying a condo in downtown Toronto for him to rent out on a 2 year lease. I am a bit concerned that I might have some trouble renting it out after that though as rent would be around 1100 for a ~700sqft 1 bedroom, any thoughts or experiences on the demand for condos to rent in downtown Toronto? And where that demand might be heading?

Also what are the latest rates you have been getting? What would be a good rate today?

Thank you if you can help

 

[thejules]

There has never been a better time to buy an owner/occupied condo in Toronto. Look at the affordability...

 

[princecharles]

QUOTE (thejules @ Oct 27 2009, 06:54 PM) There has never been a better time to buy an owner/occupied condo in Toronto. Look at the affordability...

Thanks for your comment jules. However I find it to be quite bold and general, much like my question I suppose

Toronto gets compared to New York a lot. But their market prices are twice as high. Does anyone remember New York back in the early years? Did it resemble the Toronto of today at all? Is there hope for that sort of appreciation? That would be an interesting historical comp.

I think Donald Trump once said that Toronto is the only "major city" left in the world where you can buy a waterfront condo for under 1 million. What do you guys think about this? I know Rein members are more conservative and concerned with cashflow, rightfully so in my opinion, but could we be sitting on a golden egg over here? Jules seems to think so at least..

I hear a lot people say that once you see 2 or more cranes in the skyline of the city, that the boom is over. Toronto has about 6 from my view. Some people argue this is a bad thing, but couldn`t it also be seen as a positive thing? I mean, surely growth is a sign that a city is doing well, and on the right track.

I`m not sure there is a definite answer here, just glasses half full and half empty.

 

[mike81]

QUOTE (princecharles @ Oct 27 2009, 08:21 AM) Hi all

My good friend in Toronto is a renter, so I am considering buying a condo in downtown Toronto for him to rent out on a 2 year lease. I am a bit concerned that I might have some trouble renting it out after that though as rent would be around 1100 for a ~700sqft 1 bedroom, any thoughts or experiences on the demand for condos to rent in downtown Toronto? And where that demand might be heading?

Also what are the latest rates you have been getting? What would be a good rate today?

Thank you if you can help

Hey Charles, just wanted to chime in from a renters prospective - i know lot`s of people that are currently renting around 1100 for a 1 bed, and that`s around the minimum. I currently rent a 1+1 for 1550 by the skydome... so i`m sure you won`t have a problem finding someone for 1100. Cheers

 

[invst4profit]

Toronto condos are a poor choice for a rental income business. Rent to purchase price is too low.
With the cost of condo fees in addition to all other costs associated with condos the expenses will easily be 50% of your rental income which will not leave enough to even come close to producing a acceptable ROI.
Buying condos in T.O. is not really a investment it is speculating on appreciation and should be left to those with deep enough pockets to weather the storms.
Others with condos in T.O. may have different opinions but you will find in the majority of cases those supporting this type of investment have very small mortgages which means they do not go negative every month but have a negligible ROI.

http://www.ontariolandlord.ca/forum/index....5bda48132f5cdec

Go to this site and ask about condo investments if you want to hear from T.O. investors/LLc.

 

[princecharles]

Thank you both that is very helpful.

I am wondering where one can find statistics on condo rentals in Toronto. (rent price etc, volume)

Anyone know where I might find info like this?

 

[princecharles]

Invest4profit

I completely agree with you about there being better deals out there and the rent to purchase price ratio. Although there might be a small case to be made that Toronto condo`s attract higher quality tenants, being able to afford 1200$ for a one bedroom, perhaps they subject you to less risk, as their salaries are subsequently higher than other cities. So instead of having to find and deal with the problems of 3 tenants paying 400$ each a month in a neighborhood that might not necessarily ever arrive, you just have to find one quality tenant in the largest city in the country ..

 

[markl]

Just had a friend rent out their 1 bedroom by the skydome with parking for $1,350.00

 

[Emil1753]

I`ve got a 700 square foot 1 bedroom plus den right next to the ACC. The unit also includes an underground parking space.
I`m currently recieving rent of $1645 per month. Very solid young professional tenant who`s been with me over 2 years and she keeps the place in tip top condition. Monthly condo fees are $345 which I pay.

I purchased preconstruction in late 2005 for $210,000.
Recent sales for same unit in same building are over $300,000.

I bought it on spec and got lucky I guess.

 

[bizaro86]

QUOTE Toronto gets compared to New York a lot.

The only people who seriously compare Toronto to New York are from Toronto. I wouldn`t use that as an investment rationale if I were you.

Michael

 

[princecharles]

Whoaaa well done Platinum that is amazing! She even pays utils..do you still cash flow even with maintenance dees? People in Toronto ACTUALLY go for this....it seems so..

Any tips on where to find these quality condo tenants in Toronto?

This is an interesting circumstance to me, because the rent is so high, only a very HIGH quality tenant could afford it. But, a tenant of this quality in theory should be able to afford their own condo...

I suppose these young quality professionals move to the city and rent for a few years until they are ready to buy, and that is the sweet spot you have to find them in. I am sure they could get the mortgage, maybe the down payment is the problem for them. But they certainly are not going to get to save much paying all that rent!

I don`t understand I give up!

 

[mike81]

QUOTE (princecharles @ Oct 28 2009, 08:50 PM) I suppose these young quality professionals move to the city and rent for a few years until they are ready to buy, and that is the sweet spot you have to find them in. I am sure they could get the mortgage, maybe the down payment is the problem for them. But they certainly are not going to get to save much paying all that rent!

I don`t understand I give up!

Yah, your right about that. I think some people just have a different mindset to this. There are many reasons i see why people rent - fear/lack of knowledge on ownership, culture differences, being mobile/able to pick up and go on a whim, money, credit issues etc etc But usually it`s a means to stall time, to figure out what to do with their lives.... And that`s where you come in

 

[invst4profit]

QUOTE (Platinum @ Oct 28 2009, 10:31 PM) I`ve got a 700 square foot 1 bedroom plus den right next to the ACC. The unit also includes an underground parking space.
I`m currently receiving rent of $1645 per month. Very solid young professional tenant who`s been with me over 2 years and she keeps the place in tip top condition. Monthly condo fees are $345 which I pay.

I purchased pre construction in late 2005 for $210,000.
Recent sales for same unit in same building are over $300,000.

I bought it on spec and got lucky I guess.


This is a perfect example of what is potentially a negative cash flow condo in T.O.

The payments on $210,000 at 5% is $1120/ month. Add to that condo fees of $345 you end up with only $180 per month to pay for all other expenses which includes legal, accounting, insurance, repairs, general upkeep, vacancies, utilities when vacant, advertising etc. This is a poor investment income property aside from the speculative appreciation. At $210,000 I would expect $2000/month income which in this situation (T.O. condos) is of course unrealistic.
If we were to consider the return on what is now a value of $300,000 this is a serious negative income property and definitely not a candidate for rental for any future owner based on a meager rental income of only $1645/month.

 

[Emil1753]

QUOTE (invst4profit @ Oct 29 2009, 03:44 PM) This is a perfect example of what is potentially a negative cash flow condo in T.O.

The payments on $210,000 at 5% is $1120/ month. Add to that condo fees of $345 you end up with only $180 per month to pay for all other expenses which includes legal, accounting, insurance, repairs, general upkeep, vacancies, utilities when vacant, advertising etc. This is a poor investment income property aside from the speculative appreciation. At $210,000 I would expect $2000/month income which in this situation (T.O. condos) is of course unrealistic.
If we were to consider the return on what is now a value of $300,000 this is a serious negative income property and definitely not a candidate for rental for any future owner based on a meager rental income of only $1645/month.



Agreed 100%.

I bought this and other properties before I was introduced to the REIN system and became a member.
This one worked out well for me, a couple others not so much.

 

[princecharles]

QUOTE (invst4profit @ Oct 29 2009, 03:44 PM) This is a perfect example of what is potentially a negative cash flow condo in T.O.

The payments on $210,000 at 5% is $1120/ month. Add to that condo fees of $345 you end up with only $180 per month to pay for all other expenses which includes legal, accounting, insurance, repairs, general upkeep, vacancies, utilities when vacant, advertising etc. This is a poor investment income property aside from the speculative appreciation. At $210,000 I would expect $2000/month income which in this situation (T.O. condos) is of course unrealistic.
If we were to consider the return on what is now a value of $300,000 this is a serious negative income property and definitely not a candidate for rental for any future owner based on a meager rental income of only $1645/month.

Indeed thanks. Invst4profit your posts are always right on the money!

 

[mike81]

QUOTE (invst4profit @ Oct 29 2009, 01:44 PM) This is a perfect example of what is potentially a negative cash flow condo in T.O.

The payments on $210,000 at 5% is $1120/ month. Add to that condo fees of $345 you end up with only $180 per month to pay for all other expenses which includes legal, accounting, insurance, repairs, general upkeep, vacancies, utilities when vacant, advertising etc. This is a poor investment income property aside from the speculative appreciation. At $210,000 I would expect $2000/month income which in this situation (T.O. condos) is of course unrealistic.
If we were to consider the return on what is now a value of $300,000 this is a serious negative income property and definitely not a candidate for rental for any future owner based on a meager rental income of only $1645/month.

Does it make sense as a primary residence?