Buying your first home is an amazing accomplishment. Whether you’ve simply outgrown your condo or are looking for a new neighbourhood atmosphere, upsizing to a new home comes with plenty of perks and freedoms. In addition to exciting new advantages, homeownership also comes with new financial responsibilities.
Depending on your unique circumstances, choosing to keep your current condo as an investment property can be a good way to build financial stability as you start the next chapter of your life.
Owning an investment property is a big decision. As Toronto market experts, we’re here to help. If you’re thinking about renting your condo rather than selling it, here are a few things to consider before determining which choice is best for you.
Thinking about buying your first home? Find out why upsizing as an investor makes more sense now than ever on our blog.
Timing is Everything
Over the past two years, Toronto’s condo market has been significantly impacted by the COVID-19 pandemic. With many condo-dwelling residents choosing to leave the city centre in favour of quieter communities and larger living spaces, condo prices in Toronto dropped substantially. As a result of these circumstances, many Toronto condos sold far below market value.
While the market is heating up again and returning to normal, selling now could mean settling for a lower return on your original investment. Choosing to rent out your condo, for now, will likely mean selling it for a higher price in the future. The good news is that Toronto’s housing and condo markets are trending upwards again and will likely break records in favour of sellers.
Ready to upsize to your first home? Explore these great resources.
- 5 Unexpected Changes When Moving From a Condo to a Home
- What to Know About Buying Your First Home
- How to Plan a Move With Your Family
Rental Averages
Toronto’s rental market is arguably just as competitive as its housing market. As a result, rental rate averages in the GTA have been steadily rising in recent years. As Toronto continues to be a growing world-class city, the demand for rental housing is likely to continue exceeding the supply in the coming years. The provincial government has also eliminated rent control in certain areas over the past few years, allowing landlords to have more control over what they can charge for their units.
Want to learn more about property management? Check out everything you need to know about becoming a landlord on our blog.
Financial Benefits
One of the most appealing aspects of owning an investment property is reliable passive income. Finding a stable tenant means a consistent source of additional income every month that can help you plan for other costs. While this can seem like a no-brainer benefit, charting the financial success of your investment property requires careful planning to ensure the cash flow will be positive.
As a first step, your real estate agent can determine the current market value of your condo. Next, they’ll be able to help you determine what potential rental income could be in comparison to your primary costs such as property taxes and mortgage payments. These steps can take some time, but they’re important factors to consider when making your decision.
While managing a property requires you to make certain financial commitments, it’s important to recognize that it also involves your time and effort.
Management Duties
While it has its perks, being a landlord also comes with a whole new set of responsibilities. In addition to tenant screening, collecting deposits and general repairs, the role involves a number of considerations that could impact your day-to-day. Communicating with tenants and supporting their needs is an ongoing part of being a landlord. While having a single tenant isn’t a full-time job, surprises that can require your (sometimes immediate) attention can occur. Familiarizing yourself with the Ontario Residential Tenancies Act is a great way to get a full understanding of what it takes to be a landlord.
It’s also important to consider your ability to effectively manage your property when challenges arise. If your move to a new home takes you far away from your condo, managing maintenance and other duties can become challenging.
Nervous about becoming a property manager? Get out these helpful guides to ease your mind.
When it’s time to upsize and buy your first home, deciding to sell or rent your condo is a big decision. While both paths have their pros and cons, determining which route is right for you can seem like an overwhelming process. Luckily, a great agent can help you see the full picture of both the financial and managerial aspects of owning an investment property to help you make the best choice.
Ready to buy your first home? Contact us.
