When it comes to investing in Toronto real estate, it’s important to establish your goals and have a solid real estate investment strategy in place. To ensure you get the most out of your investments, here are a few important dos and don’ts for investing in the Toronto real estate market.
THE BEST REAL ESTATE INVESTMENT STRATEGIES
DO Invest in the Right Product
Investing in the right product means looking for the best margins. This can be determined by investing in condo properties with a price per square foot that is lower than those trading in the same area. This means monitoring both the pre-construction and resale markets to see where the better value lies at the time.
DON’T Buy a Status Property
Don’t be tempted by properties that have a ton of unwarranted hype. Waterfront condos or “status” properties that are branded as highly luxurious one-of-a-kind will come with a price point so far beyond today’s current market value, that you will not see the same type of returns compared to other investment opportunities. This won’t do your bottom line any favours.
DO Use a Long-Term Investment Strategy
History tells us Toronto real estate is a safe long term investment. On average, the Toronto real estate market grows 5% per year — but truthfully, the last several years have been experiencing double-digit gains. If you’re looking for one key takeaway for your real estate investment strategy, it’s to hold on to your investment.
As your investment’s market value goes up and your tenant pays down your mortgage, you’ll be able to leverage your equity into other pre-construction condos and start building a real estate portfolio that will make for a very cozy retirement.
DON’T Flip Your Investment
Flipping condos is a risky investment strategy. When it comes to taxes, short-term investments gain much more scrutiny and risk being flagged by the CRA. Those who buy a pre-construction condo with the intention of flipping it risk being taxed as a trader rather than an investor. To avoid any tax penalties, it’s best to lease your investment property out for at least one year. And, why not take advantage of Toronto’s high rental rates?
DO Pay Attention to Local Neighbourhood Stats
Real estate investors are always paying attention to how different neighbourhoods perform. The best way to forecast your investment’s growth potential is to monitor trends in local neighbourhoods and how different types of investments perform in those areas over time. Paying attention to local market stats allows you to recognize the value in investment opportunities when they arise.
DON’T Lump Sales Stats when Choosing a Location
Many Toronto real estate market reports generalize the average home price statistics which skews the narrative. Each of Toronto’s many neighbourhoods all perform differently month to month and year-over-year.
For instance, according to TREB’s September 2019 market stats, the condo market for the 416 — or Toronto proper — only saw prices climb 3.3% y-o-y. But if you start narrowing in on different municipalities, you’ll find that E03 (East York & East Danforth) saw condo prices go up 26%.
DO Invest with a Reputable Builder
One of the best ways to feel good about your investment is to ensure you’re investing with a reputable builder. There are many condo developers that have pre-construction projects going up throughout Toronto and frankly some are better than others. Your real estate agent will have the inside scoop on who has the best track record for building properties that are high quality and perform well on the resale market.
DON’T Invest with Someone Unknown
There are always going to be new developers making their way into the Toronto condo scene from time to time. While they may be the next it developer, it’s probably best for your real estate investment strategy to go with someone who has a portfolio that you can look to for assurance that your investment will provide you with good returns.
DO Invest with a Real Estate Investor
Working with an agent who both sells real estate investment properties and is an investor themselves is your competitive advantage in building a successful real estate portfolio. Working with an experienced investor means they can create a real estate investment strategy that will provide you with a roadmap on how to make the most money with what you already have. See some of the returns Pierre’s been able to achieve for his clients.
DON’T Invest with Just Any Agent
Buying and selling real estate is quite different from investing in real estate. Negotiating an offer on a home is one skillset, understanding how to navigate the market from an investment standpoint is another. If you’re looking to invest your hard-earned money, you want an agent who understands the nuances of the market, has spent years monitoring trends, and has a solid understanding of what will affect your investment over both the short and long-term.
If you’ve been waiting for the right time to invest and need help creating a solid real estate investment strategy, let’s chat! We are always on the lookout for lucrative investment deals to extend to our clients. We don’t just recommend pre-construction developments, we recommend units that are primed for profit.