It’s a great time to be a condo investor right now… said every real estate agent ever! Well, in actuality, it couldn’t be more true right now than ever before, I swear! There are many factors that are pushing condos to be a smarter investment than ever before. Here are just a few we’ve spoken about before:
1. The shift to affordability. People can’t afford low-rise houses anymore.
2. The sheer amount of new immigrants we’re getting per annum; that’s over 100,000 people per year!
3. The lack of supply despite all the developments. Many rental buildings have been converted to condos due to rent control.
4. The sheer demand for condo living in the city. Remember, condo projects take 3-5 years to build.
5. Minimum wage increase in a few weeks. It’ll make condo living more accessible and a reality for more people soon.
Yes, all of those factors in combination make the rental rate increase unstoppable but I just wanted to pause and do a deeper dive with you all today. Everybody, especially the media, focuses on the sale stats and how the condo market looks like every month (it’s very strong right now), but what they fail to look at are the stats for rental rates which support most of the condo investors. With our friends over at Condos.ca, we can get some pretty cool real-time stats (see below).
In the charts above, you can see the average rental rates based on size in Toronto. Just looking at that, you would be really excited to be a condo investor. I mean, are you kidding me? A sub-600 square feet unit is going for $2,200 per month and is being leased in less than 12 days (it’s actually faster in certain buildings)?! As Taylor Swift would say, that’s cray-cray! We all thought that was impossible 5 years ago to command more than $3 per square foot for rent. Well… we’re pushing $4 per square foot very soon.
The chart below is even more awesome. The grey bars represent the number of transactions that happened each month, and the green line overlaying the grey bars is the price per square foot. You’ll notice that it steadily increased each and every month – even through the so-called “bubble”. Interesting right?
Since January 2017 to August 2017, our price per square foot has gone up from $2.94 PSF to $3.25 PSF – that’s a 7.6% increase in just 8 months. We passed the $3 PSF mark and it’s on pace to pass $4 PSF by the end of 2018 assuming the market stays this way (which it is as per the 5 points above). Our rental rates are basically going up almost 1% per month and your “normal” rental rate increase should be 4% a year, or 0.33% a month for an apples-to-apples comparison. This means our rental rates are going up 3x faster than they should be!
I know I’ve written about this before, but the crazy thing is the cost to carry a condo right now; is less than the amount of rent you’re getting. The only difference is just the downpayment less some expenses.
I don’t know about you, but I’m 100% excited, especially if you have skin in the game. It’s definitely an exciting time to be a condo investor right now. So don’t miss out on the recommended investment opportunities in this newsletter above.
If I didn’t make a strong enough agrument that being a condo investor is awesome right now, check out this ridiculous but awesome map that shows how much income you need to make in order to rent a 1 bedroom unit in Toronto (courtesy of our friends over at Casalova). For a copy of the full map you can google “Casalova rental map”.
Until next time, Happy Real Estate-ing!
Zhen
