I have been receiving a lot inquires in the past few weeks regarding investing in condos. Both have been from condos either downtown, or in the Mississauga area. I thought I would share some tips to help you if you were considering investing in a condo.
1) If possible buy before it is built.
This is great because you can put some money down while the property and condo value go up. The longer the wait, usually the better it is because in the G.T.A., values have been going up, not down on condos. If you cannot sit on your money do not go for this plan. Wait till something is built. Usually condo corps are delaying moving in 2-3 times.
2) Make sure you see what is included in the fees.
I’m sure 98% of people will examine this, but I do get a few people that are shocked after they buy a condo to find out certain things or amenities are extra. Even after you figure out what is included, you need to understand what is not. If you buy a condo downtown without parking, that is usually a cost of 20-30 thousand extra if you need a parking spot down the road. These extras need to be calculated to the purchase price or monthly cost.
3) Find out how much the same unit rents for.
You want to ask your Realtor to find out what the recent comparables are in the building you are considering. The next thing you need to ask yourself is the rent you will receive worth the investment after you pay the expenses and mortgage. Depending on what your down payment is, you should have a few hundred dollars left. If you don’t you could be taking money out of your pocket every month to cover the mortgage. This is not a good situation.
4) Location Location Location.
I’m not the first nor the last to say this. A highly desirable area is best. It might cost more but it will attract renters easier and be easier to sell down the road. If you have problems with your tenant leaving then you can jump right into another lease. This is ideal. You don’t want to get stuck with a mortgage you don’t want.
5) Do you homework.
Make sure you ask for credit checks, references, post dated chqs, and as much as you can get from a potential tenant. Do not just interview a tenant and go on feeling. Sometimes people are serial renters. It is hard to kick out a family at Christmas time when they haven’t paid the rent in three months. Take my word for it.
6) Talk To Residents if older building
The best advice I could give you is go to the building and talk to some people that live there. Go up and down the elevator, and ask some questions. This is the best thing to do to get information. Tenants and owners will tell you everything about the building. Talk to the concierge and the security. Be nice they will tell you everything.