Real Estate Talk:
Condos as investment

Are condominiums a good investment in today’s market?

By Joseph Marovitch

All real estate is a good investment when purchased at the right price. However, the capital gain depends on your objective for the property. At the right price, real estate will always grow in value, whether it is a condo, a house or an income property. The question is: Is the property a good investment for the purpose the buyer has in mind?

If one is purchasing a single home, the purpose is to live in the property. In terms of an investment, at the right purchase price, the property will grow in value with time. The owner can borrow against the property or sell it with a capital gain at a later date. However, a single home will not create a significant income stream, if any. A single home includes detached houses, attached houses and condos.

If a buyer intends to purchase a single home to live in it, after a year and a day the property can be sold tax-free. If a buyer intends to purchase a single home and rent it, upon selling the property there will be a capital gains tax. However, all expenses against the rented property are tax-deductible. The problem with purchasing a single home as an investment is the rent will usually cover only the expenses and sometimes not even that. Acquiring a profit from the rental of a single home is rare. As an income stream, a single home is not the best investment.

All real estate is a good investment when purchased at the right price. However, it depends on your objective for the property. At the right price real estate will always grow in value, whether it is a condo, house or income property.

A single home, as a vehicle to park money, is a wonderful investment for the long term. If a buyer can purchase a single home and cover expenses with rent, therefore not take any money out of pocket, the investment will grow over time and provide a wonderful return upon selling or upon refinancing in order to borrow money against the property to invest in another property and create a portfolio.

A very good real estate investment to create an income stream is a multi-residential property. It can be small at first, such as a duplex, triplex or quadruplex, or large such as a six-plex or more. Any multi-residential property with six or more units is defined as an income property according to the Real Estate Brokerage Act.

For further information regarding multi-residential income property, check past articles by typing “income property” in the search tab.

Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, go to the search link and type in Joseph Marovitch.

Have a great week!

Next article: Contesting municipal tax increases – is it worth the effort?

State of the market

There has been much discussion regarding the coronavirus. I was recently asked if the outbreak would affect the real estate market in Canada. I hope, like everyone else, that the coronavirus does not come to Canada, as real estate may be the last thing on anyone’s mind if this were the case.

If I were to guess, however, I imagine that people would prefer to live in a country where health factors are safer and the Medicare system is a right and not a privilege. Therefore, assuming Canada does not have an outbreak, the real estate market in Canada would benefit as people choose to move to and live in a country with a healthy climate and Medicare for all.

Image: Andrew Burlone

Read also: Other articles by Joseph Marovitch