CONDO QUERIES

It’s not ex­actly se­cret that real es­tate prices in Toronto are astro­nom­i­cal. Many buy­ers are turn­ing to con­dos as a (slightly) more af­ford­able op­tion than free­stand­ing homes. We spoke to Bar­bara Lawlor, pres­i­dent and CEO of Baker Real Es­tate In­cor­po­rated,

NOW Magazine - - SUITE LIFE - By FRASER ABE

When is the best time to buy a condo for in­vest­ment? Pre-con­struc­tion, dur­ing, post or even sev­eral years after it’s been built? Dur­ing pre-con­struc­tion, in­vestors who buy early in the process get the best choice of avail­able suites, as well as the best price. Buy­ing pre­con­struc­tion also gives you time for your de­posit to work for you. Very of­ten, in­vestors ex­pe­ri­ence an uptick in their eq­uity by the time they close a few years later. With in­ter­est rates still in­cred­i­bly low and prices most likely ris­ing even more, the best ad­vice I can of­fer is to buy sooner rather than later.

But we’ve all heard about con­dos that go way over the sched­uled time frame for com­ple­tion. What sort of re­course do buy­ers have in that case? This is all gov­erned by Tar­ion War­ranty Cor­po­ra­tion. Condo pur­chasers must read their Tar­ion agree­ment, which states the oc­cu­pancy date and all ex­ten­sions avail­able to the builder. Both the buyer and the builder sign the Tar­ion agree­ment, which spec­i­fies your dates and what re­course you have if the builder does not meet them.

Ba­si­cally, if the builder hasn’t com­pleted the condo by the end of the stip­u­lated time, you have two choices: to opt out of deal and get your de­posit back, or to sign in and give the builder per­mis­sion take ex­tra time and go for­ward. This is a big in­vest­ment, so read the agree­ment and know up front where you stand.

What are the things to look for when buy­ing a condo for in­vest­ment? Do they dif­fer from what you look for when you’re buy­ing to own and live in a unit? They are in­deed dif­fer­ent. In­vestors must con­sider the wants and needs of their tar­get renters. Tak­ing those into con­sid­er­a­tion, buy in the very best lo­ca­tion you can af­ford and make ac­cess to tran­sit tops on your list. Many renters do not own vehicles. Re­search the builders whose con­do­mini­ums you are look­ing at. Do they have track records for suc­cess? Con­sider the ameni­ties in the build­ings, since th­ese are im­por­tant to end users. Let’s face it: con­ve­nience is a ma­jor rea­son to choose condo liv­ing. Also, ask about green fea­tures, since renters pay at­ten­tion to things like util­i­ties costs.

What have the trends in Toronto looked like for condo in­vestors? In­vestors in Toronto con­dos rep­re­sent a huge part of the buy­ing public. Thus far, con­dos have proven to be a re­ally solid in­vest­ment, with year-over-year gains. Glob­ally speak­ing, Toronto is young when it comes to this con­cept, but we are fol­low­ing in the path of ci­ties such as Lon­don, Paris and New York, where the cost of real es­tate is astro­nom­i­cal. The con­cept of own­ing a condo suite as an in­vest­ment is gain­ing in pop­u­lar­ity in Toronto and the GTA, partly be­cause of af­ford­abil­ity. Many who want to in­vest in real es­tate can’t af­ford to buy houses.

How much do condo fees fac­tor in to rental fees if the owner opts to rent the condo out? When it comes to de­ter­min­ing rents, con­do­minium in­vestors should be con­cerned with cov­er­ing prop­erty taxes, main­te­nance fees and the mort­gage. If you put 25 per cent into your in­vest­ment, the rent should cover the other 75 per cent (monthly mort­gage pay­ment, main­te­nance fees and monthly por­tion of prop­erty taxes). Of course, there is al­ways the po­ten­tial for the uptick on eq­uity, but most peo­ple look for the “25 per cent in, 75 per cent rent cov­er­age” for­mula.

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