Buying rental property? If you’re searching for a profitable condo investment, here’s what you should look out for…
In my time as a real estate agent, I’ve had countless buyers come to me with questions about investment condos. Is it any wonder? There’s no shortage of Torontonians looking to rent, and demand is projected to grow as the city’s population increases. In other words: there’s a real opportunity here, and savvy investors are taking advantage of it.
Of course, not all condos are created equal—some are better investments than others. To get the best return, you need to use the right criteria during the selection process. Here are five things to look for if you’re investing in a unit.
1) Neighbourhood
Location, location, location. It’s a cliche phrase, but there’s a reason you keep hearing it.
One of the biggest factors in determining whether a condo is a good investment is its location. The neighbourhood you choose will have an impact on the level of interest you receive from potential tenants, the rent you can reasonably charge, and the price you’ll get when you eventually resell.
To make the most of your investment, look for properties close to transit, greenspace, and amenities. Think buildings on subway lines and those within walking distance of parks and grocery stores.
2) Projected area development
Speaking of location, you don’t have to purchase in the city’s most in-demand neighbourhood to make money. In fact, buying a unit in an up-and-coming area will usually give you the biggest bang for your buck.
Foresight is key. Look for neighbourhoods that are starting to attract young buyers—especially creative types. The “cool” factor counts for a lot; where it exists, gentrification is often right around the corner. If transit is planned and major chains (like Starbucks) are beginning to move in, it could also be a sign that property values are on the rise.
3) The right features and amenities
If I’ve said it once, I’ve said it a thousand times: figure out who your target market is. For each investment condo you consider, determine which potential renters are the best fit—and make sure that the unit features and building amenities are in keeping with their needs and preferences.
Are you planning to rent a one-bedroom condo to a young professional? If so, be aware that your demographic will likely appreciate a modern aesthetic and convenient amenities (like a gym or yoga studio). If you’re looking at a three-bedroom condo for a family, you might want to look for a unit with ample storage and close proximity to good schools.
4) Financial health
When you’re buying rental property, the needs and preferences of potential tenants are just one of the major considerations you should keep in mind. As an investor, you should also ensure that every building you’re looking at is well managed.
Fortunately, reviewing a unit’s status certificate can help. This crucial document will tell you how much is in the building’s reserve fund (the amount set aside for major repairs). If the sum is too low, it could be a sign of poor financial health. When you’re seriously considering a building, I also suggest asking to review minutes from the condo board’s meetings. Anything you can do to shed light on how a building is being run will help you make a wise investment (remember, your real estate agent and legal counsel can help with this process).
5) Reasonable average rents
For many investors, determining the monthly rents that tenants are willing to pay is a challenge. One of the factors you’ll need to consider is how much landlords are charging for similar units in the area.
Before you commit to a particular investment condo, do your research. Look at online ads for nearby rentals like yours. If the numbers are consistently lower than the amount you were hoping to charge, you might be better off investing in another neighbourhood.
Whether you’re a first timer or a seasoned vet, finding the right investment condo can be a challenge. Fortunately, a bit of foresight and some expert real estate advice can help ensure that you invest wisely.
Considering buying rental property? I can answer all of your questions. Call or text me at 416-500-5360, or send me an email at rashid.notash@rogers.com and ask away!
