It is estimated that in 2017 roughly 48% of condo purchasers were investors. Many attribute this high number to the fact that buying a condo is one of the safest ways to invest your money profitably. These are times where investors have little confidence in the stock market and are not receiving enough from leaving their money with the banks. Condos are usually less expensive and require less maintenance than houses, making it a perfect fit for people that want to live close to the city and expect to increase their equity and investment capital.
Toronto has an estimated population of over 6.5 million inhabitants and is slowly growing to 7 million. It is important that there be sufficient housing available for this growth. This provides an excellent opportunity for your investment portfolio.
Renting a condo is very attractive for singles and for young adults as people are often not ready to purchase a home until later in life. University or college students are also a large portion of the market that finds condo rentals attractive. This makes condo ownership an excellent investment opportunity in any university or college neighborhood.
Below we outline four reasons why purchasing a Condo in Toronto or the surrounding GTA is a sound investment strategy.
1. You are Investing in a Tangible Asset
The stock market can often look complicated and in order to be successful it is important to be educated about the market and perhaps have a bit of luck. Investing in condos does not require you to be a finance or corporate genius. It is easier to research property values and investment opportunities than corporate financial statements. History has shown that condos traditionally will hold their value as a worst case scenario but have an excellent upside opportunity. There is also the psychological factor; if you invest in a tangible asset it feels secure to be able to touch and feel your condo as opposed to staring at share certificates and portfolios.
2. Toronto & GTA Population is Growing | Condo Demand is Going Up
In economics there is the simple concept of supply and demand. The bottom line is that Toronto and the surrounding GTA is growing and in turn housing demand is growing. The demand for condos in the city has continues to grow over the last 20 years continues to grow making the purchase of a condo as an investment a safe one.
3. Monthly Revenue Stream
Renting out your condo can create a fixed a monthly cash flow from the rental income. The cash flow can be used to pay off your mortgage or invest back into the condo.
4. High Return on Investment
Investing in condos historically provides a high return on investment. There are two ways to make money when investing in the purchase of a condo; through rental income as mentioned earlier and the equity increase in the property. When renting out your home, rental income generates a fixed amount of positive cash flow every month. The amount of monthly revenue will depend on various factors i.e. where the condo is located, quality and size of the condo building, upkeep of condo premises etc.
It is a big advantage to purchase a condo when it’s first offered on the market and purchase at pre-construction prices. Historically and as a general rule, the condo will have already increased in value by the time it is ready for occupancy.
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