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10 Things to Consider When Investing in Condos

Posted On Monday, 23 May 2022 12:44
10 Things to Consider When Investing in Condos

The Toronto housing market has recently seen a sharp price decrease, making now an ideal time to invest in condos. Even in a buyer's market, you'll need to explore your options before making an investment.

These 10 tips will help you find a condo that's worth investing in.  

1. Set Clear Goals and a Firm Budget

What do you plan to do with your investment property? How large of a mortgage can you carry? How much cash will you need to cover the down payment and closing expenses?

You need to ask yourself these kinds of questions before you start evaluating properties. If you're planning on making the condo your primary residence and the price of the condo is below $500,000, your down payment can be as low as 5%. However, if you want to rent out the property, you'll need a minimum down payment of 20%. 

Your plans will have a direct impact on the choice available to you, which is why it's best to set clear goals in advance. Set aside time to research financing options ahead of your purchase.

2. Get to Know the Neighborhood

Location plays a crucial role in real estate, which is why you'll want to explore the neighborhood that the condo you're considering is located in. If you manage to buy a condo in an area that's still up-and-coming, you could see a significant return on investment.

Neighborhoods that have plenty of restaurants and shops tend to have a lot of appeal. If there are new restaurants opening up in a more affordable part of Toronto, you may want to look for condos for sale nearby. There's a good chance that the neighborhood is on the rise. 

3. Look at Comparable Properties Nearby 

You can get a more accurate picture of a condo's potential as an investment property by exploring comparable properties nearby. Check out listings for Toronto condos in the same neighborhood, paying close attention to the price per square foot.

If a condo has a lower price per square foot than other condos in the area, that property is likely to be a smart investment. Since real estate prices in Toronto have been fluctuating, looking at current listings can help you evaluate the price of the condo you're interested in.

4. Choose a Unit With Mass Appeal

While you might be happy living in a one-bedroom condo, units of this size can be difficult to rent or re-sell. When a property has less space, you'll have a smaller pool of potential buyers or tenants. 

You'll also want to watch out for things that could become an issue in the future. If a unit is located near a community room or an elevator, you could wind up dealing with noise complaints. Condos that aren't close to major transit and subway lines can be a tough sell.

5. Don't Be Afraid to Invest In Amenities

While you may have to spend more to buy a condo in a building that has lots of amenities, this is likely to be a worthwhile expense. People are drawn to condos because of perks like fitness centers, perks, and entertainment spaces. A property that's lacking in these amenities may have less resale value. 

It's important to evaluate both the unit you're considering and the building that the unit is located in. Try to find a fantastic unit that's located in a building with lots of appealing amenities. 

6. Consider Buying In the Winter

If you're willing to be patient, you may want to invest in a property during the winter season. While you'll find fewer listings during this time of year, you'll also see lower prices and better deals. 

Many people don't want to move during the cold winter months, which means there's less competition for real estate. You could buy a condo in the winter and rent out the property once spring rolls around. 

7. Read Up On the Building Regulations

If you've found a property that seems like a good fit, and you're thinking about making an offer, set aside some time to read through the condo by-laws. While many buildings have regulations that are fairly lax, others have restrictions that could potentially get in the way of your investment. 

It's especially important to go over condo by-laws if you want to rent out the unit to tenants. Find out if tenants need to be approved by the condo board. If the building does require board approval, learn how long the process is likely to take.

8. Look at Long-Term Costs

Many condos offer great deals on maintenance fees to new buyers. However, these fees may skyrocket after the first year, leading to increased costs for you. 

It's important to read over contracts carefully to get a better idea of what costs will look like in the long term. If you're drawn to a unit because the building's maintenance fees are low, make sure those fees will stay low. 

9. Be Prepared for Unexpected Expenses

Even when you try to plan for everything, there are unexpected expenses that will crop up during your real estate deal. When you budget, try to set aside money for these extra expenses. That way, you'll be prepared to cover these costs. 

Certain things are out of your control when you're investing in real estate. Thankfully, if you set aside extra funds, you'll be able to cover extra costs without putting a strain on your budget. 

10. Work With a Real Estate Attorney

Real estate investment is complex, which is why it's wise to work with an attorney that specializes in this area. An experienced lawyer will be able to evaluate the contract and the condo disclosure statement and identify potential problems. 

While hiring an attorney will cost you more, it could ultimately save you a significant amount of money. A lawyer can help you to identify potential problems, allowing you to walk away from bad deals. Having an expert on your side can reduce your stress and give you peace of mind throughout this process. 

Conclusion

Condos can be a very smart investment, especially in a costly real estate market. With this advice, you'll be able to avoid potential pitfalls when buying your investment property. You'll be able to maximize the return on your investment and make a purchase that could pay off in a big way.

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