What drives downtown prices?

[buytorent]

Just found this site and think it is great, please bear with me I am new. Need some advice. Looking to buy to rent. Wondering what drives prices, could use some Toronto Downtown Condo 101.

Looking to buy presale/resale. Not sure which. Was originally thinking presale hoping that by the time it is built prices will be better and at worst I could rent out. But after reading some posts I am thinking resale would be better.

I was told that for my purposes(investment) try to buy a 1 bedroom + den + parking space as close as possible to bay. You will attract the best tenants. Is this correct?

Other questions I have:
Can you resell a presale before completion?
How difficult is it rent out downtown? assuming rent is priced competitively

Any advice at all would be greatly appreciated.

 

[Yossi Kaplan MBA]

Buying Investments

I was told that for my purposes(investment) try to buy a 1 bedroom + den + parking space as close as possible to bay. You will attract the best tenants. Is this correct?

Other questions I have:
Can you resell a presale before completion?
How difficult is it rent out downtown? assuming rent is priced competitively

Any advice at all would be greatly appreciated.

1 - ask the person who provides you the advise this question:

"Why?"

who says that 1+den with parking will provide better returns? rule of thumb, the larger the unit, the smaller are your returns.

The real cost of a parking spot is approx $200/mo. - mortgage, taxes and condo fees on the parking spot combined. Can you lease it for $200? bet you can't.

The real cost of larger condos rises faster then rents on larger condos, that is why bachelors and Jr. 1-beds tend to ROI higher then larger units.

Location: WHY is your adviser telling you to go to Bay street?

My advice to you, is to ask WHY? and to calculate each investment opportunity for its own.

Best of luck,

- yossi

 

[buytorent]

Thanks Yossi,

My "adviser" suggested Bay St, because the closer to the financial district the crazier the hours the tenant will likely be working. Hence his thinking is the "best" tenant would be one that is never at the apartment.

I am new to all of this, I am not sure what kind of tenants/problems to expect downtown.

So the smaller the condo the better the return?

 

[JayBee]

Bay Street does tend to command higher rental prices. Why? I have no clue. Maybe the prestige?

 

[simuls]

IMHO I think it depends more on the building than the location - as long as that location is south of Bloor, West of Jarvis and East of Dufferin. Even in my hood, a unit at DNA will go for more than Battery Park or even the new London on the Esplanade. As long as you're central, you'll be fine, just do your homework. There is really not a lot of money to be made, buying to rent right now as prices are simply too high and the rents don't offset the costs enough. Both price/rent should be dropping (in the smaller condo market anyway) over the next 2 years. Unless you find a great unit for $350/ft, I wouldn't jump in...save more money and see what happens.

 

[latifimr]

So then why buy parking when you buy a condo? Even if you own a car, you'll probably be able to rent a spot for cheaper. Does parking have a big impact on resale value of the property?

 

[luxome]

IMO, parking can increase the resale value especially for large units (1000+ sqft). Wealthy people do not like the idea of not owning their stuff. They want their own home and parking and from my experience, wealthy people are willing to pay the extra dollars for things that they can call their own.

Imagine owners in Ritz Carlton not owning their parking. I'm sure they are willing to pay the additional cost for parking. In some cases, money is not an object to them and would rather have the prestige of owning their items rather than renting.

Imagine how bad it sounds when you have someone living in 3000sqft unit telling their friends, "hey, i live in this spacious condo unit, but i rent my parking." Sounds pretty ridiculous IMO.

 

[Eug]

Bay Street does tend to command higher rental prices. Why? I have no clue. Maybe the prestige?

Well, it's convenient and well located, and the buildings are better than average. Essentially all of Bay is safe and nice. It's also next to Yonge without being on Yonge, and it's close to the financial district, the university, teaching hospitals, attractions, etc.

So then why buy parking when you buy a condo? Even if you own a car, you'll probably be able to rent a spot for cheaper. Does parking have a big impact on resale value of the property?

Yes. Some buildings do not always have extra spots for lease/rent. There are waiting lists. Even if you do find a spot, there's no guarantee you'll have it more than a year. You can sometimes find spots in nearby buildings, but obviously it's a major PITA for obvious reasons.

Imagine how bad it sounds when you have someone living in 3000sqft unit telling their friends, "hey, i live in this spacious condo unit, but i rent my parking." Sounds pretty ridiculous IMO.

It's not the ridiculousness of how it sounds, but the real practical issues. While someone with a 450 ft place may not be able to afford the "luxury" of parking, someone who can afford even "just" a 900 ft 2 bedroom unit will usually want parking, esp. in areas where permit street parking doesn't really exist (like Bay Street). I don't represent everyone of course, but I personally would never buy a condo in that area without parking, even for just a 1 bedroom unit. No parking = no sale. However, I'm saying this as someone who would buy to live there. I'm not saying it as someone who would buy to rent out.

 

[luxome]

It's not the ridiculousness of how it sounds, but the real practical issues. While someone with a 450 ft place may not be able to afford the "luxury" of parking, someone who can afford even "just" a 900 ft 2 bedroom unit will usually want parking, esp. in areas where permit street parking doesn't really exist (like Bay Street). I don't represent everyone of course, but I personally would never buy a condo in that area without parking, even for just a 1 bedroom unit. No parking = no sale. However, I'm saying this as someone who would buy to live there. I'm not saying it as someone who would buy to rent out.

i totally agree with you regarding no parking for smaller units. that's why i mentioned the larger squarefootage. I'm also in the same shoes in terms of owning my own parking. It helps me sleep better at night knowing that i have my own parking . However, if i purchase/live in a bachelor unit with no bedrooms then i may not be as interested in purchasing a parking. Anyways, just want to clarify that generally larger units (esp. wealthy people) will want to own their parking.

 

[dt_toronto_geek]

Even if you don't own a car a parking spot can be handy for friends & family when they visit, or just rent it if one finds that it's still not being used. Newer condos have guest spots, many older buildings do not. Also, at any time the parking spot can be severed and sold separately if the need arises or if a potential purchaser doesn't have the use for a parking spot when it comes time to sell.

 

[confusion]

Bay Street does tend to command higher rental prices. Why? I have no clue. Maybe the prestige?

Bay St condos usually fetch a high price because of their location. Many are next to Queen's Park and government buildings, mixed with the bustle and convenience of Yonge Street shops/restaurants on the other side, it's a perfect mix for a downtown residence.

 

[Hank]

Also, at any time the parking spot can be severed and sold separately if the need arises or if a potential purchaser doesn't have the use for a parking spot when it comes time to sell.

That's only true if the parking spot has a separate title. My uncle bought into a condo that he thought had one parking spot (not separately titled; listed on the title for the unit), but when he examined the title he found out that it was supposed to have two and the previous owned had 'sold' one of the spots to another resident in the condo. Anyway, my uncle basically went to the guy that had 'bought' the spot and told him to stop parking there...nothing the guy could do (he actually moved shortly after because he couldn't live there without having the extra spot).