Nicole Harrington in Listings of the Week
Toronto’s housing market is as diverse as its people: ranging in price, size, and location. We pick the top Toronto listing in each category weekly, with this week’s focus on properties with investment potential. Who made the cut this week? Read on to find out.
Here’s our top pick in the 6ix.
INVESTMENT OPPORTUNITY
414 Concord Ave - $829,900
Neighbourhood: Dovercourt Park, Toronto
Agent: MARIA ARLENE BROOKS
Brokerage: ROYAL LEPAGE/J & D DIVISION
The way things are going in the Toronto real estate market, many would wouldn’t bat an eye if you said housing was a hot commodity – making investment potential very possible for the savvy consumer. That’s where our pick this week comes in –it’s a two story semi-detached duplex, containing three separate legal units in the Dovercourt Park area.
What I really like about this dwelling is that it can be used in a multitude of ways – you can rent out each one of the three units, or you can live in one and rent out the other two. Let’s break down how this could work out financially:
OPTION ONE – RENT OUT EACH UNIT
Number of Units to Rent: 3
Monthly Mortgage Payment: $2,937.89 (based on a purchase price of $829,900 with the minimum down payment ie. 20% or $165,980, for a total mortgage of $663,920 @2.39% with an amortization period of 25 years)
Average Rent for a 1 Bedroom Residential Unit: $1,300 per month (based on comparable unit rents in the area)
Gross Rental Income: $3,900 (3 units x $1,300 a month average rent)
Without accounting for other monthly expenses such as heat, hydro, water, and property taxes, we can see that these rentals provide income at 132% of the monthly mortgage payment. In contrast, let’s look at the financials if you were to live in one unit:
OPTION TWO – LIVE IN ONE, RENT OUT TWO
Number of Units to Rent: 2
Monthly Mortgage Payment: $2,937.89 (based on a purchase price of $829,900 with the minimum down payment ie. 20% or $165,980, for a total mortgage of $663,920 @2.39% with an amortization period of 25 years)
Average Rent for a 1 Bedroom Residential Unit: $1,300 per month (based on comparable unit rents in the area)
Gross Rental Income: $2,600 (2 units x $1,300 a month average rent)
Based on the above calculations, without taking into account other monthly expenditures, the gross rental income will cover approximately 88% of your mortgage – leaving you with just a little over $300 per month to cover on your own.
Although we assumed the same down payment, one of the advantages of living in the property means that you do not need to put 20% down since it is a primary residence. In Ontario, the mandate is a 20% down payment for investment properties, but the regular mortgage rules apply to a home you live in. By living in one of the units, it would allow you to get into the house with less money down – meaning you could get into the market by ways of investing sooner rather than later.
Both opportunities provide you with excellent investment potential, but which one you would pick really depends on what your goals and aversion to risk are. First and foremost you need to figure out why you’re purchasing the investment property – are you looking to grow your portfolio, do you have money you would like to invest, or are you looking to live in an area you may not be able to afford on your own? Any of these could be solid reasons to consider an investment in real estate.
So, that begs the question: which opportunity would you pick?
Nicole Harrington is a Sales Representative with Realosophy in Toronto. She specializes in using data and analytics to help her clients make smarter real estate decisions, concentrating on Toronto and the GTA, and hosts her own website: SheSellsToronto.com. Email Nicole
