Toronto is one of the most vibrant cities in Canada to live as well as travel. An excellent mix of food, culture, job opportunities, entertainment and nightlife makes it one of the top cities in the world. Having said that, it is garnering good interest as a destination for real estate investment as well. The below guide is all about giving investors some important tips to avoid overpaying for an apartment in Toronto Condo Market.
The real estate Toronto Condo market is among the most popular in Canada. Be it luxury apartments, residential homes or stylish downtown condos for sale Toronto, there is something for everyone. If you plan to buy a home in the city, be rest assured that you will be living in one of the most beautiful cities in Canada with world-class amenities, services and entertainment.
Buying a home is the most exciting as well as the most daunting event for one and all. Apart from the obvious purchase price, there are several additional costs that come as a surprise. Some of these budget-expanding figures you might have anticipated and some you might have not, which is why it’s important to keep a checklist that will help you not to miss out on this stretch of expenses.
According to a research study, it has been found that a majority of people buying condos are investors. Most of them are investing in real estate with the purpose of having savings after retirement or to save for their children in case they would be interested in the real estate market in future. It has been determined that several Canadians are keeping an eye on the real estate market to invest in it later. Thus, it is important to save yourself from overpaying for a property. The following tips will help you to be aware and not make costly mistakes while stepping into the real estate market.
Make Distance from A Bad Developer
All Toronto condos are not developed the same way. There are always better ones than others. We know you might not need something way better than the best but it is important to be wise enough to check whether the developer is delivering a product in fine design and quality or not. Keep in mind that a lot of money is being spent on marketing by these companies. You might feel that you sealed a great deal once you are out of the showroom as the salesperson provided you with ample reassurance. But then you end up finding various faults in the property such as leaky pipes, thin walls and poor ventilation. You will be certainly disappointed with this and it will further affect the resale price of the condo as well.
We would suggest you do thorough research and choose a developer with a great track record in the location. Don’t get fascinated by the marketing glamour of the company. Those sassy brochures and miniature models won’t help you in making the right deal but the quality of their previous developments will.
Do A Thorough Research on the Neighborhood
It is quite obvious that a neighborhood is a major factor that affects the value of a property. And we are not talking about the accessibility of the location or the beautiful views from the rooms. Here we are talking about homeless shelters and community housing in the neighborhood. These factors majorly affect the property’s value in the same locality. Any new construction in the area can affect the property’s value.
Thus, it is important to do in-depth research of the localities you are looking for properties in and discover if there are any permits for zoning changes or new constructions. Hire a real estate agent with great knowledge about the neighborhood to get informed about any proposals of the upcoming projects.
Check The Taxes You Will Need to Pay
Home sellers are not entitled to principal residence exemption, which means the property you are selling doesn’t lie under your main living quarters and you will have to pay the complete tax on the profit earned on the appreciation. Sellers under principal residence exemption generally consider their profit as capital gains tax and others as income tax. Capital gains tax is where you have to pay tax on half of the profit and income tax is where you have to pay tax on 100% of the profit.
Several variables affect the taxes you need to pay when you sell a property. For instance, what type of property you are selling, the property ownership duration in case you sold a property or properties in the last year, any modifications you did to the property to make it more appealing and your purpose to buy condo Toronto. Make sure to check thoroughly whether the Canada Revenue Agency will tax you as capital gains or as income. This will save you from surprises at the time of filing taxes.
Overpaying is Easy in Toronto Condo Market
Overpaying is quite common in the real estate market. Condos and apartments in Toronto Condo Market are usually sold at notably higher prices than the prices asked. Sometimes buyers get too excited to crack a deal that they end up paying an amount that is not worth the neighborhood and the size of the property. Due to their limited options, single homes are sold at more consistent prices. However, the continuous supply of new condo projects has resulted in a decrease in their market prices. Flippers who buy condos during the pre-construction phase are usually found to increase their prices to sell. Furthermore, in case flippers figure out that they paid more for the property than its actual worth, they will try to sell it to the next buyer with extra cost.
Note that condo properties like the ones in high-demand locations and with multi-bed rooms or the ones that are located in boutique complexes might be available at relatively higher prices in the market.
Beware of the Wrong Realtor
Finding the right realtor is a bit challenging when you buy or sell a home – be it a condo, a detached home or a townhouse. Experienced or inexperienced, realtors charge an almost similar price for commission. Hence, hiring someone with more experience will give you a benefit without extra costs. Realtors with good experience and skills have a better understanding of the buying and selling process, are more experienced in certain areas and also have a knowledge of the track record of several condo developers.
Thus, it is advised to find someone with good experience of selling houses in the location you are seeking a property. Do not consider part-time realtors and some family friends with no experience.
In case you realize that the realtor you have hired isn’t capable enough to help you get the right deal, you can always decide who you want to work with. This is because you have signed commitments (if any) with the brokerage but not with the salesperson. Thus, you can reach out to the manager of the brokerage firm to check if someone else is available that can suit your needs better.
Don’t Make Investment Mistakes in Toronto Condo Market
It has been found in a research study that the prices of condos in Toronto Condo Market are reaching heights. They are increasing faster than rental prices. Also, several condo investors who choose to rent out their property to pay the principal amount are not making any profits. The research study also predicted that it is going to be difficult for investors to take care of their expenses by renting their properties out due to a rise in the economic environment and the supply of condos. If rent control and interest rates will keep rising, investments in condos will always be difficult to manage.
Remember, if you buy an investment property to rent out, always choose to make a huge down payment. The huge down payments help you attain a positive cash flow. However, in case you are facing any loss, this opportunity will help you curb tax burdens.
Summing It Up
Alright, so we believe now you have a clear picture of how you can be misled while investing in an apartment or condo in Toronto. Hopefully, the above-discussed tips will help you determine the factors that can cause you to pay more than the obvious purchase price. Consider doing thorough research on the Toronto Condo Market and choosing a well-experienced real estate agent that can provide you with proper guidance in your home buying process. The skilled professionals have an in-depth knowledge of the cost of selling a condo in Toronto which will certainly help you make a fair deal. So gear up to buy your dream home in Canada that will benefit you in future for sure.