Thinking of transitioning from homeowner to investor? Here’s what you need to know

The real estate market in Toronto and the Greater Toronto Area has been remarkable over the past few years, especially for investors. Historically, real estate has proven to be a lucrative investment for both investors and homeowners, provided that the purchaser is willing to ride out the ups and downs in this cyclical industry. As rising interest rates have affected end-user sales, the current situation is encouraging for investors, because the rental market is on fire. Average rents across the GTA have gone up nearly 20 per cent over the past year – numbers that positively impact investors’ returns.

Investors know that interest rates are still relatively low. With major bank variable rate mortgages near four per cent, and five-year fixed products at closer to five per cent, the actual monthly blended payments are still at a reasonable range. As an offset, softening prices will help keep overall loan costs still within check for most buyers. Furthermore, as inflation tames, rates will likely come down. So, forget what the rates were months ago, that’s yesterday’s news. We all know those couldn’t last forever.

Big picture

If you look at the big picture, the costs for land, development and construction all continue to rise. Thus, prices for preconstruction condominiums have only one way to go, and that’s up. This has been the state of southern Ontario’s market for years, and I am banking on nothing changing going forward. How many times have I heard people say, “I wish I bought then, when the prices were so low per square foot.” This is why I say that the best time to buy pre-construction is now. Plus, we all know that you get the benefit of today’s prices while only having a relatively low deposit, securing your purchase for what will be delivered years out.

Location, location, location

And how about location, location, location? It’s not only Toronto and the GTA where there are excellent opportunities. We sell a lot of pre-construction in the Niagara Region, for example, and nearly all those buyers are from the GTA. Location is critical, and I advise investor clients to go where the GO is going. Niagara has a GO train, which makes it a popular destination. Hot properties are always situated on or around transit lines. If you’re an investor who intends to rent out your property, transportation and convenience should always be top of mind when selecting a spot. In fact, that goes for anyone purchasing a pre-construction property. Remember that even for end-users, your home or condo is both a lifestyle and financial investment.

When some things in this industry go down, others go up. Whether you are a first-time or seasoned investor, look at the big picture and do your homework. Now is your time to shine.