As a result, we’ve heard some pretty bad advice over the years. Some of it is innocent misinformation. Other times it’s completely off the wall. And believe us, we’ve heard some real doozies over the years.
But of all the awful things we’ve heard, there are a few pieces of advice that are head and shoulders above the rest as pure rubbish. Just the absolute worst!
We’ve compiled some of the terrible tidbits we hear. We’re hoping to dispel some of these ridiculous reasons today.
“The Condo Fees Aren’t Worth It.”
A lot of the poor advice we hear comes from American real estate sites. The truth is that it’s not bad advice. It’s just misguided. For the markets that these American writers are writing about, they’re probably right. Condos aren’t the best choice in some areas of the US.
In Canada — and especially in Toronto — things are a little different. In many US markets, the cost of condos is comparable to the cost of single family homes. Toronto, as you may know, is a different animal.
According to TREB’s report released in June 2016, the benchmark price of a single-family detached home is $826,400. That’s up 18.77% from June of 2015!
Condos in Toronto have a benchmark price of $415,326 for Q2 2016. They appreciated at a more sustainable (but still very profitable) 7.1% since that time last year.
Now the majority of the single-family detached homes are VERY old inventory and need major rents and/or upgrades on almost a regular basis. The condo inventory is MUCH newer and come with warranties, so your overhead outside of the maintenance fees is very little if any at all. I’ve owned a beautiful detached home and I can tell you that I spent tens of thousands on upgrades. I’m happy to say I now live in a condo as my primary residence 🙂
At less than half of what a single family home costs, the condo fees are a drop in the bucket. And, those condo fees often pay for great amenities like a pool and an exercise room!
“Developers Are Building Too Many Condos!”
Toronto has some of the lowest vacancy rates in Canada. And condos, too, share these ultra low vacancy rates.
According to a report published by Urbanation, vacancy rates in rental developments are now at 0.5%. Meanwhile, new condo supply has dropped to a 6-year low. We often feel like a broken record, but all the facts are there. We’re in the midst of one hot condo market.
“Rent, don’t buy — real estate is just a money pit!”
This one’s a real gem. The worst of the worst. Real estate is like other investments. It’s possible to get a lemon. And that’s why you protect yourself. We’ve discussed risk minimization at length, and that’s why we’re here to help you.
With new-build condos, Tarion is there to help protect you against shoddy workmanship. If there’s a problem with your condo in the first few years its built, the builder has to repair it themselves. And pay for the repairs, too!
Imagine you bought a condo for $400,000 two years before it was move-in ready. You live in it or rent it out for five years — while covered by Tarion — before selling. At a conservative 5% appreciation per year (remember, GTA condos have appreciated 7% in the past year alone) compounded annually for seven years, you’d be looking at selling your condo for just over $562,000. Now that’s a great return!
The worst advice you can get is to put your head in the sand and not to invest at all. There’s nothing worse than sitting on the sidelines during the golden age of Toronto condo investing. While nay-sayers are crying that the sky is falling, but they’re missing out on the rising tide of Toronto condos.
Ryan Coyle, Co-Founder CONNECT Asset Management