# Should I buy a condo in Toronto



## vitaminsarenecessary (Dec 31, 2014)

fiance and i have decided to keep renting, thanks


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## OnlyMyOpinion (Sep 1, 2013)

I won't comment on buying a condo in TO these days as an investment. 
I will say that if I was a condo 'landlord' in TO, I'd be talking to Rachelle (Berubeland on CMF).
http://landlordrescue.ca/

Added: I am not promoting her business, I know her simply as a long time member of the CMF who is very knowledgeable, and willing to share that knowledge and her (never wishy-washy) opinion


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## Spudd (Oct 11, 2011)

Based on Craigslist listings, for a 1BR condo at Yonge/Sheppard you'll be lucky to get 1700/mo (most are asking 1500-1600, some asking 1700-1800). Such a condo will cost you 300k. Condo fees will be 400/mo. So now you're getting 1300/mo. Property tax will be $2116/year, which means now you're getting $1124/mo. I don't know how much insurance will be but let's say $80/mo. Now you're getting $1044/mo. 

That works out to a 4.1% return on your investment, and that's assuming the absolute best case scenario (no vacancies, getting the high end of the rent scale, tenants paying on time, not paying a property manager, not paying for any repairs).

You can buy Rio-Can which is Canada's largest REIT and get 5.9% dividends on your investment without worrying about things like vacancies, etc. Yes, the stock price of Rio-Can can go down, but so can the price of your condo (and in fact, I'd say this is likely since Toronto is in a huge housing bubble right now, and condos are likely to be hit the hardest since there are more and more going up every day). 

So all in all I would not suggest buying such a condo.


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## FrugalTrader (Oct 13, 2008)

In addition, you aren't really buying an investment, you are starting a business. The business of providing tenants with a place to live. Are you reading to deal with tenants? If not, then you'll need to hire a property manager which will incur further expense.


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## james4beach (Nov 15, 2012)

I would say a strong 'no'. I lived in downtown Toronto for years, and in this time frame several of my friends bought and then got rid of their condos. Nothing looks more bubbly to me than the Toronto condos. If you wander the streets, all you see are cranes building condos. Talk about over supply!

Condos are simply a horrible deal. You get shoddy workmanship (poor quality construction, glass that shatters and rains down on the streets). They look slick when they're new, but the maintenance costs add up. You have monthly maintenance fees and those fees can go WAY up high, as repair work needs to be done.

They bring in unqualified workers to do these installations. Shoddy construction materials, tied to organized crime no doubt, with crooked construction contracts. The city is one big cesspool of condo construction projects.

Those estimates of "rental income" are always way, way over-optimistic. Eventually you will get a crappy tenant, someone who causes damage, squats, doesn't pay rent, and causes you other grief. In the short term you can make income. In the long term, the maintenance and crappy tenants will kill your return on investment.

It's a huge amount of capital risk, debt, and leverage to take on for a TINY profit. That's assuming you even see a profit; a lot of people don't.


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## marina628 (Dec 14, 2010)

My daughter is paying $1550 a month plus hydro at lakeshore and parklawn , units like hers sell for about $350,000 and the condo fees are $461 a month ,IMO not a great investment for her landlord but we choose to hold our cash and not be her landlord  I would not buy a condo now.


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## nobleea (Oct 11, 2013)

"Should I buy a condo in Toronto as an investment now?" is like asking "Should I get a lobotomy?"


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## Sherlock (Apr 18, 2010)

vitaminsarenecessary said:


> I'm thinking about buying a condo/apartment near the Shepard and Yonge area in Toronto. It's very close to subway trains and its relatively easy to find tenants that's willing to pay $1600-2000 per month.





vitaminsarenecessary said:


> The average price around the area is $300000 so it's about 5.2% annual rate of return which isn't bad.


I think your assumptions are way off.

A quick search on MLS reveals that 300k will only buy you a 1 bedroom condo in that area (or even a 0 bed bachelor), and a 1 bed condo doesn't fetch 1600-2000, you'll be lucky to get $1400.
Here's one for $1350: http://www.realtor.ca/Residential/S...LE-AVE-Toronto-Ontario-M2N2T9-Willowdale-East

In order to get $2000/month from a tenant you will need a 2 bed condo, and those can't be found for 300k. They're more like 450-500.

You have greatly overestimated how much rent you can charge, and greatly underestimated how much it would cost to buy the condo, no wonder your rate of return is so good.


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## Sherlock (Apr 18, 2010)

marina628 said:


> My daughter is paying $1550 a month plus hydro at lakeshore and parklawn , units like hers sell for about $350,000 and the condo fees are $461 a month ,IMO not a great investment for her landlord but we choose to hold our cash and not be her landlord  I would not buy a condo now.


That's a terrible rate of return, her landlord is losing money every month, unless he bought the condo many years ago for a much cheaper price.


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## andrewf (Mar 1, 2010)

Most of these landlords are 'specuvestors'. They are content to lose money on an operating basis, because they are betting on rapid price appreciation.


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## marina628 (Dec 14, 2010)

The building is fairly new and the prices have not increased much in last 3-4 years so i think they definitely paid 300k+


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## lost in space (Aug 31, 2015)

understand why you might be hesitant to buy a REIT

This should help you

http://www.dividendearner.com/best-canadian-reits/


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## lost in space (Aug 31, 2015)

FYI

http://canadianmoneyforum.com/showthread.php/52945-Stuck-in-Winnipeg


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## Berubeland (Sep 6, 2009)

I just want to butt in here and say that most of my clients are cash flow negative on their condos. If you have a 80% mortgage, you're shovelling in $300-400 per month, if your tenant moves and you have to paint and have some vacancy... 

It's disturbing to realize how much overbuilding is going on.


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## Durise (May 16, 2016)

It seems not good to buy a condo. I have some experience and I know that It may pleasure for you for the first time when you buy. But after some days, you may face some problem about your condo. It may create some negative decision but you might not like it. So I think it's not better decision.


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## GizelleGizelle (Jun 10, 2016)

But there is a bigger flow of foreign ( especially Chinese) investment in condominiums. Analytics say that 2016 will be a record year of the foreign investment in the condo market, with Toronto, Vancouver and Montreal as central cores.


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## sprocket1200 (Aug 21, 2009)

POP!


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## dogcom (May 23, 2009)

Condo's are being built everywhere but single family houses on land are very hard to multiply in Toronto and Vancouver. In Vancouver land size is everything as land is running out to build on.


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