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Buying a Condo for Rent, best locations?

Admiral Beez

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I'm thinking of buying a condo as a rental unit. I don't want a me-too condo that will compete with the glut of the market. What locations do you recommend? Any formats to avoid, studios, three bedrooms, etc? Budget is about $250 - $350K.
 
Annex. Older bldg near the subway. Can't go wrong. While other condo properties in the GTA decline 25-30% this will only decline 10-15%.
 
I'm thinking of buying a condo as a rental unit. I don't want a me-too condo that will compete with the glut of the market. What locations do you recommend? Any formats to avoid, studios, three bedrooms, etc? Budget is about $250 - $350K.

Why a condo? You are in great competition with other condo owners. And, the laws in Ontario are very tenant-friendly....make that "bad tenant friendly" (and "bad landlord friendly"). It's a bad combo.

With that purchase price target you could get a semi-detached outside of Toronto that would not only be easier to rent out, but would likely see significant appreciation.
 
I think the best location should be downtown. Statistics shows the most popular unit for rent is 1 bed plus den. It gives the flexiability to accomodate two persons. The tenant need only pay extra $100-$200 on top of the typical rent for a 1 bed room. But that extra space create much more convienence to them. If you charge, say $1500, that's fairly affordable for a family with two incomes.
That's provided the plus den really is a den and not a shoebox-sized niche in the wall.
 
Why a condo? You are in great competition with other condo owners. And, the laws in Ontario are very tenant-friendly....make that "bad tenant friendly" (and "bad landlord friendly"). It's a bad combo.

With that purchase price target you could get a semi-detached outside of Toronto that would not only be easier to rent out, but would likely see significant appreciation.

outside Toronto? significant appreciation?


Pffffffff.

Dream on ONLL.

Btw, I dispute your notion that the laws are tenant friendly. They were rather draconian until about 1998 when the PC's lifted hard rent controls but there are pretty balanced today.
 
Hamilton is undervalued and should see significant growth........take it from me I'm a Doc..opps REALTOR :cool:
 
I would recommend Scarborough, specifically the Town Centre area. A large number of newer units for sale around there at competitive prices. I think the STC area is currently undervalued, at least compared to the rest of Toronto.
 
You haven't got much good advice yet above, so here is some free good advice.

If you are using this as an income property, you must come up with a capitalization rate that you desire (e.g. 7% to 10% is decent). Then you need to find a property with a price and net operating income that fits that cap rate. When computing net operating income (NOI), make sure to include all expenses and deduct for vacancy allowances. Also account for the time/effort you will put in, allowance for interest rate increases, and lost opportunity cost of your deposit. Get clear documentation from sellers about expenses, and look at the leases he/she has to verify rental rates. These days you are unlikely to get a decent cap rate with any condo, or any single rental unit property. Income properties are poor investments right now because the market is so high (look at prices relative to income). I also wouldn't count on appreciation at all. You may be in for a significant loss in fact.

If you don't know how to do these calculations, or are not willing to do the leg work to learn and acquire the correct information, you should not be a real estate investor. It is that simple.

right now you are better off buying some nice dividend stocks, renting, and enjoying your free time.
 
outside Toronto? significant appreciation?


Pffffffff.

Dream on ONLL.

Btw, I dispute your notion that the laws are tenant friendly. They were rather draconian until about 1998 when the PC's lifted hard rent controls but there are pretty balanced today.

No damage deposits? While just about every other province has them. That's just the start of the list. 4-6 month evictions for non-payment. Private landlords are leaving the business in droves in Ontario (besides the downtown Condo market). Take a look at www.Ontariolandlords.ca.

Appreciation in the GTA? It's been a great year. Look North of Major Mac.
 
I would recommend REITS. You don't have a physical asset, but it's simply less management for the same purposes. Condos are tough to rent out due to their excess supply (go on mls, see how many cookie cutter 1br+ you can find within the 1300-1600 dollar mark.
 
I would recommend REITS. You don't have a physical asset, but it's simply less management for the same purposes. Condos are tough to rent out due to their excess supply (go on mls, see how many cookie cutter 1br+ you can find within the 1300-1600 dollar mark.

Hi js97, I have no idea what REITS is and I wiki'ed it but I still don't understand what it is. Is it a stock? Is it related to properties? Thanks in advance.
 
A reit is a "real estate investment trust".

Please understand these are highly leveraged assets.

Depending on the REIT, it can invest in apartments (cap reit for example), nursing homes (Extendicare for example), Riocan or others which invest in plazas and other investments or you can buy Canadian Reit which invests in all the Reits.

Reits are designed for income seekers. It is easier to manage than property directly. It can be bought or sold but it varies to a degree with the property market but also the stock market.

Some Reits are paying out more than they take in. They survive by issuing new units and buying more properties but you have to be careful. They have had a very good run (until recently) so you face a lot of the risks you face with directly owning property. For a small part of a portfolio and to get exposure to real estate, this is a strategy but this should not be viewed in my opinion as the same thing as physically owning property.

Look at the investment grade of REITS and you will see they are quite low. This is because they are highly leveraged. So you need to do your homework here.
 
^^ Agreed...

I would also recommend Florida. Tampa and Orlando have 4/5 year condos from 32 to 50k for approx 700 sq feet. Rental incomes of 600 to 800 per unit.

Obviously, with anything, do your research, but at the price of a parking spot in Toronto, I feel it's a fairly 'safe' investment with lots of potential in the 10/15 yr horizon.
 
Buying in a foreign country brings up all sorts of issues. If one has rental units in Florida, one has to file US tax returns, there is withholding amounts of money. There are issues with regard to managing real estate far away.

I don't think this is very easy for a novice investor. So while the opportunity may be better (or not), I think this is not an investment for a first time landlord.
 

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