Condo Investment - The Queensway/Royal York - Toronto

5 Replies

Hello to all the folks in Toronto and Happy New Years!

I'm currently in the middle of an investment I made.  I purchased a pre-construction condo back in May of 2013.  Interim Occupancy begins at the end of this month.  My PDI is scheduled for Monday.  The unit will just be sitting...I'll be out of town for the next 6 mths.

I'm currently trying to re-assign it but not getting many bites...I did over price it thought, along with bad timing.  I'm relisting with a reduced price next week.

I need to drop another 5% as per the agreement.  The dp structure is pretty good 5 down at signing and 5 during closing.  If I sell, I hope to do it before closing so I can save out on the hefty land transfer taxes.  At this rate, I may break even...if I'm lucky, I'll make 5% but that will be gone in realtor fees.  I've been analyzing and testing the market, and I don't believe it's gone up in value much.  This leads me to this thread.

For the investors and experts, what do you think of the area in terms of long term holding and rental is concerned? Do you believe the area will appreciate in the short or long run? This is just an open discussion, obviously no one can predict the future but I'm curious on the opinion of others in the real estate game.  My two options are to dump, take my 10% elsewhere or to hold and rent it out.  I may get approx $1800-$1850 per month plus util.  Mortgage will be low 300s.  Maintenance is 40 cents per sq ft.  At 1800-1850/mth rent, I'll probably be breaking even. I have a 2 bed, 2 bath, south view, 730 sqft.

Thoughts?

Thanks!

My opinion of Toronto is that it is massively over-priced.  Having family in Toronto, we looked at investing there, but just couldn't find anything we didn't think was overpriced by a lot.  For prices to keep appreciating, incomes have to increase to keep pace with the increased cost of the mortgages and interest rates have to stay at historic lows indefinitely.  My personal opinion is that when interest rates eventually do start going up (and they will - sooner or later) people will no longer be able to afford the high housing prices they currently have.  That will lead to some degree of market price adjustment.  But, that's just my opinion.

From a hold and rent perspective, the rental market is great there.  

I have 2 condos that I payed around $145.00 for each unit and I get $1500.00. Per unit for rent. It sounds like you may have payed quite a premium for the unit. If you can be cash positive on the unit I would keep it and draw income. If not take the sale and move on. Condo's only work if they are cash flow positive from the start as they do not appreciate much. But can be a good investment if bought for the right price.

Did you buy at IQ? They currently still have the 5pc program going on with phase 2.

I live and work in the area as a Realtor. I think the area is going to get a lot busier and more developed for sure as folks continue to get priced out of the downtown core. With that said, you have to align your actions with your investment philosophy.

Think about what you would like the property to do for you? Why did you buy it back in 2013? Is this something that will provide you a passive income in your later years - something to sell later on down the road to pay for tuition for your kids - or was it in fact just meant for a quick flip? The answer to these might inform what you do with it. Closing on it and being out of pocket slightly each month (with a tenant) may be irrelevant if you plan on keeping it long term.

Another piece you have to be VERY careful about is the HST that you may owe on the property if you assign it.

Hi Danny, tough decisions to make. Great area but New condo market in TO is very tricky with so much inventory. Renting out is always a good plan B.
Also be careful with the HST, the CRA are really cracking down on new condo flippers so I would budget to give up another 13%...keep us updated.

Thanks a lot for the responses.

Paul, it's at Qube Condos - 760 The Queensway. Initially back in 2013, my intent was to assign it and try to make something but the figure was wishful thinking back then...9 people have their units listed on MLS as assignments right now and one of them being the same model as mine for the price I never had in my mind (somewhat low). My backup option was to lease it out and hold for several years. I'm not even sure if I can cover the mortgage and all expenses with the rent because someone has it for rent for 1850/mth at the moment and it' been sitting on MLS for 2-3 mths. That will definitely cover my interim occupancy fees but once it closes, my mortgage and all expenses may be 1900-1950/mth. I may have no choice but to rent it out immediately during interim occupancy b/c I'm not living in it, sitting vacant.

So I'm at a point right now of just contemplating and thinking things over...do I see a future for the area, my thoughts are all over the place.  They don't offer 2nd parking spots to anyone...had a couple potential buyers back out due to that reason alone.  The building is nice...the unit is a little narrow, I have to maneuver an island somewhere to make it presentable.

Yes, aware of the HST costs and all but at the same time I save 10-15k on closing costs (excluding downpayment).  Pre-construction condo purchasing sucks you dry.  I feel I want to dump this and invest in a home a little up north...much more value from an investment standpoint.  From my experience, I can make the same amount of profit with a new home in a year of 2 compared to a condo sitting for 5+ yrs.  Only downside is a much higher downpayment.

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