Wondering whether it makes better financial sense for you to invest in a new condo in Toronto than a single-family dwelling? Here are five of the likely benefits new condo investing in the GTA offers over single-family homes!
Investing in a condo can often be more affordable than investing in a single-family dwelling for many reasons. For one thing, condos generally command a lower purchase price. This is especially true in big cities like Toronto where high prices and a heated real estate market have put single-family homes out of reach for many new property buyers.
Historically, condominium prices tend to be lower than those of single-family homes. According to the Globe and Mail, the gap between the price of a new house and a new condo has now skyrocketed to nearly $300,000, up nearly $40,000 since the end of last year. See the Globe’s full story here
Investing in a condo, whether it’s pre-existing or pre-construction, means you’ll have less to spend on maintenance. Buying into a newer, higher quality building is easier to look after compared to what you may have to undertake with a single-family older dwelling.
Many Toronto condos have been built in the last 5-10 years. Compare that to single-family homes, where fewer and fewer new homes are being built in the city every year. In general, older buildings have sustained more wear and tear and will require much more maintenance and repair costs.
As a condo investor, you’ll of course also need a down payment. But it may be a little easier to digest. The down payment schedule on a new condo is directly tied to a percentage of the property purchase price. Also keep in mind that when you invest in a new condo, your down payment is spread across a much wider time frame, while the development is being built.
When buying a single-family home the down payment is needed in its entirety and all at once. As a result, you’ll be able to enter the real estate investment arena earlier and potentially make more passive income!
Another benefit of condo investing is that resale appeals to wider demographics. From young urban professionals, to parents buying condos for their children to live in, to senior empty nesters or retirees, condos appeal to many different types of home buyers.
The best condo investments tend to be located in good neighbourhoods, close to mass transit and include amenities that suit their target population’s needs. The logic here, being that these location are also great for rental income to supplement your return.
Lastly, investing in a new condo could generate a very rapid increase in property value (property appreciation) and therefore a greater potential for you to make an overall profit.
Because new condos are initially priced “below market” to ensure they sell quickly, your appreciation “starting point” is obviously better than if you had started with re-sale “market pricing”. Inherently, your likelihood of rapid appreciation to higher market based prices is very good. So they can be a wise and attractive investment for investors looking for a rapid return (ROI).