Are condos worthwhile as an investment?
Hi there,
I live in the Kitchener-Waterloo region of Ontario, Canada. There has been a lot of development here in the last few years and a lot of tech jobs coming to the area. With the influx of people and jobs, they are building a lot of condominiums in the downtown areas. I recently went to see one - ~560 sqft selling at $289,000 (The Charlie West development by Momentum Developments). The presentation was good, the mock unit looked nice - I went back home and ran the numbers. Based on current rents, average unit price appreciation, condos fees and property taxes - it would be a negative cash flow for the first 7-8 years, excluding planning for any repairs or vacancies. But apparently the majority of this building is already sold out, with over 50% of the units being investors.
I sent an email to the agent that had taken us through the presentation - and she agreed the numbers were likely accurate but I should be looking at this with a "long term view of the price appreciation and someone paying the majority of my rent".
I'm wondering what the consensus is on 1 bedroom condos for renting, and the idea of negative cash flow? I already have a duplex I rent with over $250/m in positive cash flow. Everything I've ever read regarding real estate has warned of the idea of negative cash flow.
Please let me know your thoughts, opinions, ideas.
Thanks.