The Toronto real estate market can be a lucrative place to put your money. There are several different ways you can invest in Toronto real estate, depending on the resources you have available. These are some of the strategies you can use to get the most out of the Toronto real estate market.
Invest in a property with lasting appeal
When you’re searching for a house to live in, you’re not necessarily thinking about its future value, but you should. For most Canadians, their house is the single largest investment they will make in their lives. Not only does it represent a significant part of your portfolio, but your principal residence can also be one of the most effective ways to earn tax-free profits. In Canada, the principal residence exemption means that you do not pay capital gains taxes when you sell your house.
Think long-term when you’re house shopping. There are certain qualities that can give a property lasting appeal and help it appreciate through the years. Location is a major factor in a property’s value, and a townhouse for sale in Toronto that’s close to transit, jobs, and amenities will have enduring value.
If you’re thinking decades down the road, find out about the future of the neighbourhood. A property near a new transit line like the Ontario Line or the Finch LRT can skyrocket in value once construction is finished.
Consider investing in a rental property
A rental property is a tried-and-true method for investing in real estate. Rents are historically high right now, and a rental property can provide ongoing income.
The most important factor for successfully investing in a rental property is making sure you’re cash-flow positive. Calculate your expenses after your mortgage payments, insurance, and setting aside money for repairs. Compare those costs to typical rents in the neighbourhood where you’re thinking of buying.
Consider the benefits of investing in a triplex or duplex rather than a single-family home. If there are several units, you’ll be less exposed to the risks of a bad tenant or an extended vacancy.
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The risks and rewards of flipping investment properties
Property flipping is the practice of buying an underpriced home, usually one in need of a lot of work, renovating it, and selling it shortly after at a profit. House flipping can be lucrative, but it also comes with significant risks.
Renovating a home can be a lengthy and expensive process, and during that time, you have a lot of capital committed to a single investment.
There is always the risk that the housing market can change abruptly on you. Even if you’ve added value to a property by fixing it up and renovating, if the market crashes, it can be very difficult to recoup your initial investment. Be careful before you decide to try flipping a property, and make sure you don’t invest more than you can afford to lose. There’s no such thing as a guaranteed investment.
The Toronto real estate market can be a great investment if you approach it with the right strategy. Have a plan in mind and find the best way to invest for you.
I am a 50-something Torontonian who loves everything about my city. It’s been my home, my playground, for my entire life. I went to school here. I met my wife here. I own real estate here. I love writing about the transformation of my city on the world stage, which hasn’t been anything short of dramatic. That continues on, as I write this. I write on the real estate scene. I write on travel and fashion. I like following the world of luxury watches.
But I love writing about cars – check that, luxury cars, a level of superior, engineering sophistication, high performance and style, that transports you not just from one destination to another but also out of whatever you are going through on a particular day, whatever mood you are in, all to another head space. It’s complete and total exhilaration, head to toe.
Check out my stories, and email me direct at mkeast@regardingluxury.com
