Sanjeev is a young Pharmacist from Vancouver. She met with me back in 2007 and at that time she was quite keen on investing in real estate in Toronto. Even in 2007, I was already selling investment properties to real estate investors from the GTA and overseas. I was curious to find out why Sanjeev wanted to invest in Toronto.
Sanjeev told me that Vancouver condos in 2007 were selling at approximately $650 per square foot (p.s.f) and that she felt they might not continue to appreciate like lesser expensive Toronto condos. Meanwhile in Toronto in 2007, new builder condo prices were hovering around $400 p.s.f.
I was very impressed with her knowledge, confidence and her zeal to succeed as a real estate investor. We sat down for a number crunching session, discussed new vs. resale condo buying options, buying costs, landlord tenant responsibilities, property management etc., and we decided to buy a new builder condo in Downtown Toronto.
New builder condo investment in Downtown Toronto with a reputed builder was the best possible alternative, at that time. Over these years, Sanjeev has added many more properties to her real estate investment portfolio in the GTA.
Sanjeev is one of those savvy young investors who understand the ins and outs of real estate investing. She believes in the benefits of holding real estate for a longer-term, and to top it all, she is a good landlord too.
Last week, Sanjeev sold her first real estate investment in Toronto that she had bought in 2007. She sold this property at $610 p.s.f.
And like any humble person, she graciously gives me the credit for all her success. In fact, today I received an unexpected, yet thoughtful and lovely thank you note and gift from her.
Many of you must be thinking if you too should invest in Downtown Toronto condos and reap the real estate benefits. Right?
You need to rethink…
Real estate is driven by affordability
In 2007, Vancouver’s average condo prices were $650 p.s.f., today they are approximately $750 p.s.f. That’s only $100 p.s.f. price growth in six years. Or in other words, 600 square feet condo that sold for $390,000 in 2007, now sells for $450,000. At the same time above Downtown Toronto’s condo’s price rose from $400 p.s.f. to $650 p.s.f. That’s almost 10.4% price increase per year (before buying and selling expenses), in Sanjeev’s case.
The more expensive real estate becomes, the less affordable it is for people to buy and for investors to make sense of real estate investing. So what rang true for Vancouver investors might also repeat for Downtown Toronto investors in the coming years.
Affordability is one reason why new builder Downtown Toronto condos are made smaller in size. As per one report by Urbanization, out of 9,090 Toronto condos slated for completion in 2014, 67 per cent are studios, one-bedroom units, or one-bedroom plus dens. The average size of all these units is only 695 square feet compared to an average size of 822 square feet in 2013.
Where is the next growth coming from?
With interest rates so low right now, investors who are looking at a better per square feet price and good rental returns should be looking towards Downtown Mississauga condos and freehold properties in Mississauga & surrounding area. Condo prices in Mississauga today are what they were in Downtown Toronto in 2007. A decent condo in a newer building sells for approximately $400 p.s.f. (normally smaller units sell for more price p.s.f. and p.s.f. price goes down as unit size increases).
Be smart by start investing in real estate when you are young
If you are living with your parents, and are already working, you should invest in a condo or a small freehold or a condo townhouse ( currenty the most popular investment types for my investors), put it on rent and continue living with your folks. You won’t even realize how soon your investment will reap you rewards just like my other young investors, like Sanjeev.
