Five Common Mistakes People Make Buying a Toronto Condo

Every year in Toronto, plenty of people buy a condo on a simple promise: hold it five years and the price doubles, and collect rent every month along the way. Some of the people repeating that promise barely know the market. I want to spend a few minutes on the reality of the Toronto condo market instead.

I am Moe Asgarian, a senior real estate broker in Toronto. The condo market here matters more than most people realize. There are now more condos in the market than non-condo homes, and new towers keep going up fast. Investors have poured in, buying on the numbers they see. Whatever happens to condos ends up shaping the whole Toronto housing market. Here are the five mistakes I see buyers make.

Mistake one: buying for a quick price jump

If your only goal is to buy a condo and watch it spike in price by the end of the year, please do not. Based on sales volume, the number of condos on the market, and expected interest rate moves, I expect the average Toronto condo price to land somewhere between minus 2 and plus 2 percent by the end of 2024. That is not a market that suddenly rockets. Keep in mind that if you buy with 20 percent down, a 2 percent gain is actually 2 times 5, so 10 percent against your down payment. Honestly though, do not buy a condo for anything under five years. The condo cycle runs roughly five years, and you should count on holding from five years and up.

Mistake two: buying pre-construction blind

Pre-construction projects are hot right now, no pretending otherwise. Agents earn a bigger commission selling a pre-sale unit than a finished condo, and these projects get heavy marketing. Some are genuinely good, some are not, and even the good ones can take years to pay off. I get calls from people who invested in a project and now just want out. I look at what they bought and often think, why not buy a finished unit next door for 15 to 20 percent less? On average a pre-construction home sells for 20 to 30 percent more than a comparable finished one. You need an agent who actually knows this work. If you needed heart surgery, you would not hand it to a kidney specialist. A license lets someone buy and sell anything, but knowing the pipeline of projects, the developments coming, and what city hall is planning for that area is a different skill. Sometimes pre-construction can even be cheaper than resale, but not every agent knows how to find that.

Mistake three: assuming a landlord's life is easy

It is not automatic. In Toronto about 95 percent of tenants are genuinely good and cause no trouble, but a landlord can still spend months in court or dispute resolution. In Ontario the rules lean toward the tenant more than the owner. People call and ask me to sell a condo that has a tenant in it, and they need to know you cannot simply remove that tenant to sell. The sale itself is not a strong enough reason in front of the board; the tenant can move with 60 days' notice only after the deal closes, and even then it takes a process, sometimes with a payment involved. Plenty of buyers also want a unit that appreciates and pays them monthly rent, what people call cash flow positive. With 20 percent down in today's Toronto, that is very hard. You would need roughly 35 to 40 percent down just to break even against these high mortgage rates. It can still be a good investment over five or six years, but the idea that 20 percent down leaves money in your pocket each month is not accurate today.

Mistake four: buying with your heart

Buying a home is not a purely mathematical decision, and part of it is emotional, fair enough. That does not mean you hand the whole thing to emotion. Buyers fall for units that are beautifully staged with bright photos, but you are really paying for two things that outrank everything else: a good floor plan and the location. You cannot change either one later. Do not buy out of fear that if you skip it today, it costs more next week. For the profit side, think in at least five-year terms. A good technique: after your agent walks you through a unit, score it out of 10. A seven is not enough to put half a million or a million dollars on. Below a six, do not even discuss it. A condo should earn at least an 8, an 8 leaning toward 9. That is when you sit down and build a real offer strategy.

Mistake five: buying in an investor building

This one hits first-time buyers hardest. An investor project is a building where, say, 80 percent of the units were bought as investments and rented out, versus a building full of people who own and live in their units day to day. Why avoid the investor-heavy one? Because their reasons for buying are very different from yours. They check that it is new, that the tax rules work in their favor, and they buy purely to profit. That does not make it the right building for you, especially if this is your first home and you plan to live in it. Ask what percentage of units are tenanted and what percentage are owner-occupied. Your agent can run those numbers so you buy as an end-user in a building that is not an investor project. Two quick extras worth knowing: property reviews skew negative, since happy residents rarely post, so weigh them but do not judge on them alone; and do not let amenities decide it, because you spend about 95 percent of your time inside your own unit, not the gym or party room. Location and floor plan beat all of it.

If you are weighing a condo purchase and want a straight read on the building, the floor plan, and whether the numbers work over five years, fill out the form at the bottom of this page or book a free consultation and we will go through it together. Stay well and take care.