My 10 Tips for Buying a Condo in Toronto

As I write this in September 2024, the Toronto condo market has nearly stopped for investors. Units are sitting for weeks, and plenty of owners now want out. Some of them realized they could have put their money somewhere better than a condo.

I am Moe Asgarian, Principal Real Estate Broker in Toronto and ranked number 47 at RE/MAX worldwide. Here are ten things I would pay close attention to if I were investing in a Toronto condo right now.

Start with resale, mind the taxes, watch the trend

Tip one: think resale first. A finished unit you can buy and close on quickly is simpler than a pre-construction project. New buyers assume pre-construction is cheaper because you pay less up front, but that is not how it works today. The builder usually charges more in the end. Ten years ago pre-construction made sense. Right now, in this market, it often does not. Tip two: taxes. When you profit on an investment condo, the government taxes that gain, and if the gain tops $250,000 you pay more. Talk to your accountant. Sometimes holding the unit under a company name lowers your tax, and sometimes putting that money into renovating the home you already live in is smarter. Tip three: know the price trend. Back in 2000 the average apartment was $168,000. By 2011 it hit $365,000, and September 2012 sat at $376,000. Prices peaked in April 2017 when the Fair Housing Plan and the foreign buyer tax arrived, then again in February 2020 at $723,000. Right now the average is $748,000 against a peak of $831,000. That gap is the opportunity.

Down payment and rent control

Tip four: down payment. Put at least 20% down for an uninsured mortgage. But honestly, if you do not want to feed the property every month out of pocket, plan for around 35% on an investment buy. Tip five: rent control. Units occupied before November 2018 have limits on how much you can raise the rent. A brand new build does not carry that limit. If I were buying to invest this year, I would lean toward a building that is not rent controlled, purely for the cash flow. Once in a while an older unit is a genuine bargain worth chasing, so pay attention to the building's year.

Tenants, expectations, and management

Tip six: landlord and tenant rules. You cannot simply remove a tenant and sell. You have to sell to a buyer who will move in, or move in yourself, and even then you owe the tenant at least one month of rent as compensation. My experience with tenants has mostly been excellent. Around 98% are good people who eventually buy their own place and move on. A small percentage cause trouble, but it is far smaller than people fear. Tip seven: keep expectations realistic. Every investor wants monthly cash flow and equity growth, but you rarely get both from day one. With 20% down in Toronto, do not count on cash flow, even with rents as high as they are. Tip eight: property management. For a condo it is usually not necessary. Handing a company around 20% of monthly rent buys you a nice service but takes a real bite out of your return.

The right unit and the right broker

Tip nine: what type of condo to buy. There is no simple answer. Smaller units turn over faster, so you keep finding new tenants, though each turnover lets you raise the rent. Larger units in better neighbourhoods tend to attract tenants with higher income, and the quality of what you buy is directly tied to who wants to rent it. A three-bedroom bungalow in Newmarket might rent the main floor for around $3,000 to a family growing their household, while a two-bedroom downtown condo rents for about $3,000 to a young couple in tech or finance. Two very different tenants, two very different sets of expectations. Tip ten: hire a full-time real estate broker. We all have friends who do real estate part time, and they may be good and trustworthy, but buying a condo as an investment is a specialty with a lot of moving parts. The same goes for the person who arranges your mortgage and the lawyer who closes the deal. If you want help finding the right unit, fill out the form below or book a free consultation. Stay well and take care.