Resale condos are units sold by the current owner. When you are looking to purchase a resale condo, the process is just like buying a new house. You are able to determine if you like the unit itself as it is fully finished, as well as if you like the condition of the building and surrounding amenities. Investors of resale properties often get the keys within 30-60 days and you are able to hand keys over to your tenants immediately instead of having to wait a few years for the completion of a new build. This means that your investment starts to pay off after day one. There is increased financial certainty because you are able to get your mortgage pre-approved immediately based on the current rate which will determine your exact carrying costs. You are also able to negotiate a better deal with another owner rather than a developer as owners of resale properties may be more motivated to sell due to life circumstances. It is important to buy in a building that will appreciate in value. Keep in mind, one day you will want to sell the property and you will want to ensure you make the most equity possible.
Income properties are houses that have self-contained apartments that are rented out such as a duplex or triplex. Investors are looking for a property that will generate income with this type of investment. The calculation used here by investors is the capitalization rate (cap rate). The cap rate is the rate of return on a real estate investment property based on the income that the property is expected to make. The cap rate is calculated by determining the operating income over the purchase price. The higher the cap rate, the more lucrative it is for the investor to purchase. Generally, with this type of investment, properties are older and require more maintenance repairs. You will also have multiple tenants which means you will be dealing with your tenants more frequently.
Flipping houses is a term used for buying a run-down our outdated house with the intention of renovating and reselling typically within the year for profit. Flipping a house is not an easy task so make sure you consider all costs associated and work with a Real Estate who can help guide you through this very risky process. The main advantage of flipping a house is that generally, the investor will see their return within a year, however, the strategy is the riskiest real estate investment anyone can take part in. In this type of investment, the opportunity to lose money is far greater than any other investment. We advocate for Real Estate being a long-term investment and when you try to flip a property in a short period of time you are increasing your exposure to risk. With a flip there are unexpected cost that a property may uncover that an investor may not be aware of and these unexpected issues could take up all of the expected profit which is one of the reasons why it is so risky. Make sure that you have an experienced agent and contractor who can accurately predict the upfront and exit costs associated with the project.
Mixed use properties combine commercial, residential and industrial spaces into one property. Mixed use developments are designed to provide home affordability, walkability between housing and workplaces, and stronger neighbourhoods. Some buildings are used for residential living and some are used commercially. Some benefits of investing in mixed-use development is that there will be multiple streams of income for the investor, a wide variety of tenants and higher rental demand because of the walkability and close proximity to community amenities. In downtown Toronto mixed-use properties have appreciated immensely over the last decade and have proven to be excellent long-term investments. However, because of the price point, an investor typically requires a substantial amount of money down. In addition, mixed-use development typically requires a higher down payment percentage – usually 25-35% down vs. just 20% down on any other type of investment. Commercial taxes are higher than residential taxes which means that your carrying costs are also higher on a mix-use property.
The demand for pre-construction condos is extremely high for investors looking to allocate money with the future expectation of a profit. Investing in a pre-construction condo means that you are buying a condo unit in a building that has not been developed yet. The main advantage of buying pre-construction is that investors are putting less money down over a longer period of time. Typically, the deposit structure with pre-construction is 5% increments over the course of 1 to 1 and a half years with back end expenses not needing to be payed until 4 years later when the development is finished. This allows the investor to have more leverage on the investment as they are not forced to put as much money down right away. In addition to this, with pre-construction, you are buying a brand-new building which will likely command the highest price when it is complete vs. everything else that is currently available. Pre-construction condos are desirable to rent because tenants like moving into a brand-new property. With pre-construction there are often several delays so your exit off of the investment is typically longer and there are more closing expenses in comparison to resale condos. Take a look at our preferred pre-construction projects here.
When you are making a Real Estate investment there are certain factors that contribute to higher returns which is why working with a well-versed Real Estate agent is invaluable. The market is always in flux and we are constantly tracking the active market and adjusting our strategies to guarantee that our clients receive the best returns possible. By monitoring trends and pricing in all areas and on all products, we are finding the best investment opportunities based on the market at the time.
Book a call with us today to discuss investment opportunities tailored to your unique situation.