If you’re in the market for it, here are our top tips for buying a condo in Toronto:
1. Location
Location, location, location! When reviewing the breakdown of purchase price across the city, location always has a huge impact on price. While most people knowledgable on the Toronto neighbourhoods, future developments can have a big impact on the area and the gentrification process. It’s important to not only consider the neighbourhood now, but also look into what the future holds. This could help you find a great deal if you are looking for a long-term investment!
Another choice you’ll need to make when buying a condo is whether you want a resale condo or a pre-construction condo. Find out which is the better deal.
2. Understand Your Carrying Costs
This is a great piece of advice for first-time condo buyers. When you purchase a condo, the cost of your mortgage isn’t the only fee you need to consider. You will also be responsible for paying your condo maintenance fees, taxes and your insurance. Your maintenance fees are calculated based on the size (square footage) of your unit. The bigger the unit, the more the fees. Generally, a newer building will have lower maintenance fees since there isn’t as much maintenance to worry about. Older buildings generally will have higher maintenance fees, but they will, in most cases, have a larger floor plan. Something to consider is that your maintenance fees will never go away, even if you pay off your mortgage, and over time, these fees will increase. So make sure you are budgeting not just for your mortgage but for the big four: mortgage, maintenance fees, taxes and insurance.
You might even come across unexpected issues, for example, what would happen if your condo building were flooded?
3. Owners vs Renters
When purchasing a condo, you are either buying the property as an investment or to live in. This decision should be taken into consideration when you are on the hunt. There are some buildings that are over 90% renter occupied, which is ok if you are buying as an investment. There is nothing wrong with renters; however, owners are going to take more pride in ownership and treat the building with more care than someone who does not own the building. A general rule of thumb, if you are looking to buy to live, is to look for a condo building that is at least 50% owner occupied. This information can be found in the status certificate, or if you reach out to your Toronto real estate agent, they should be able to give you an idea. If you are buying to rent out, this is much less of a concern.
4. Set Expectations
Real estate is an investment that we all hope pays off. We’ve seen the condo market appreciate in the double digits over the past five years, but that isn’t always going to be the case. On average, condos appreciate around 7% every four years. If you are looking into the future to get an idea of what type of growth your purchase will produce, crunch the numbers on the safer side, around 3-5% per year, and you will be much happier with the results.
These numbers are not set in stone, and if anything, the market can be somewhat unpredictable. Check out these posts next for more:
- Why Toronto Condos Aren’t Selling
- How to Sell a Condo in a Downward Market
- Danielle in the City’s GTA Real Estate Market Predictions
5. Price Per Square-Foot
Calculating what a buildings average cost per sq ft will certainly help you when evaluating the worth of a unit, but this is not down to an exact science. Some smaller units may be worth more per sq ft than medium to large whereas luxury units could sell for more. There are many factors that also come into play for example: floor level, parking, balcony and usable square-footage. The layout can make all of the difference, wasted square-footage can bring down the value. While this is certainly something to consider when purchasing, don’t base your entire offer decision on this stat alone.
6. The “WOW” Factor
As you all witnessed during the real estate boom, everything was selling. The good, bad and the ugly were flying off the shelves. People were just happy to get in the market. While that is the case in a strong market, in slower markets, a condo unit that has a “wow” factor is going to sell much quicker than the average, cookie-cutter Toronto condo. What is a “wow” factor, a fabulous view, a great layout, a boutique building, tons of visitor parking, great finishings, etc.
Buying a condo to use as investment? Read: Rent Cap Rates and Pre-Construction Condos next.
7. Cookie-cutter vs. Boutique
There are pros and cons to purchasing both of these condos. When purchasing the tall, cookie-cutter buildings, the amenities are galore. Gym, pool, security, theatre room, sauna, great views, etc. While you benefit from these amenities, your wallet doesn’t. Maintenance fees tend to be higher in a building that features amenities as a seller. Whereas the boutique style buildings are smaller, have no bells and whistles, less time to wait for elevators, and more of a community feel. In slower markets, the boutique style tends to sell a little quicker.
8. Work With a Local Specialist
We eat, sleep, and breathe real estate. If you are in the market for a condo, call someone who knows the buildings, the layouts, the management companies, the builders, the neighbourhoods. Take it from a team of experts, we all want to see your investment succeed and help you build wealth through your purchases.
If you have any questions, we are here to help. Feel free to reach out to one of our specialists!
Danielle Demerino
ddemerino@royallepage.ca
416-728-5401
