Toronto Pre-construction Condos and Appreciation
We all know what appreciation in Real Estate is, right? You buy a condo in Toronto today for $500,000, and magically, in five years that same property is worth $700,000. Assuming you didn’t make any major investments in improving that property, then yes, you have experienced some decent appreciation.
In today’s GTA condo market, investors usually like to put a minimum amount of money towards a down payment for a unit. The one downslide to this is that it can affect the cash flow. A small down payment strategy requires a larger mortgage, and thus one’s monthly mortgage payment is proportionately larger. As such, it is difficult to obtain positive cash flow early on in the condo investment. We see that quite common in Toronto pre-construction condos investment.
Cash flow is what many investors look at to determine the validity or profitability of a property, but this is often a mistake, since cash flow only reflects the direct return. The other factor, which must be considered in a Real Estate investment, is indirect return – or appreciation.
The investors (and home owners!) who are as interested – or more interested – in appreciation as the key investment factor, often try to get ahead of the game by looking for the “next great neighbourhood”, so as to ride the wave of rapid property appreciation. While historically this was done only by savvy investors, today most people are well informed and have access to sufficient information to understand neighbourhood and market trends. Instead of looking for that hidden gem, which is becoming more and more difficult, a sound investing strategy can also be to simply buy into a quality condo project, by a good developer/builder team, in an area that is reputable and stable.
Click here to read more: Above article was Written by Guest Blog Writer Claude Boiron – Broker, Author, Educator, Speaker.
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