Beach Investing 5 Years Later – Episode #198
It’s been 5 years since I started this blog and it’s amazing how much things have evolved! The feedback and support has been tremendous…THANK YOU!!! I truly enjoy sharing all these experiences with you and I feel that these videos are getting more educational every episode.
I wanted to provide you with a quick market update for all residential properties in 2015:
Average Price in Toronto (GTA) – $622,217 (10% increase from 2014)
Average Price in East York (E3) – $689,529 (9% increase from 2014)
Average Price in The Beaches/Danforth (E2) – $849,535 (13% increase from 2014)
Average Price in Leslieville/Riverdale (E1) – $730,563 (10% increase from 2014)
The market was very strong in 2015 and has continued into the beginning of 2016 with demand being much higher than the supply. There are predictions that interest rates will start increasing which will probably get the market more active early so buyers can take advantage of the historically low rates. With the new mortgage rules and interest rate rumours and low oil prices, this year promises to be another interesting one to say the least. I personally don’t believe in mass panic. I believe there is a strong reason for this steady demand in the real estate market and a continued one for that matter well into the future. I say this with the focus on areas that continue to drive demand with growing jobs and transportation improvements. Economic fundamentals are key right now and important to understand before making any long term decisions.
Typical Duplex style income properties that just a short few years ago used to sell for the low 600’s are now selling between 775-910k. The rents have not gone up that much in value to justify the property value increase so therefore monthly cash flow has decreased for today’s buyers. So what you need to start looking for are properties that have rents that gross 4k or higher. And properties that allow this type of rents that I have seen are 2.5 storey homes that have a large main unit that rents close to 3k plus the basement of your typical 1200/month. Or creating 2 large units in these properties that rent close to 2200-2400 per unit for a total gross income of 4400-4800 / month. These generate positive cash flow of approx. 600-1000 / month. And of course the best option is to find one of these properties and renovate it to your spec and rent them out.
-Just east of Woodbine and Danforth i.e. Oak Park (900’s for your renovated 3br/2ba between 1500-2000 sqft home)4 Oak Park asking 589 and sold 770 nothing special just your typical well maintained home with bsmt apartment, Gledhill (1.276M for an ultra modern home only 25 feet wide), Coleridge are all examples.
What’s Not So Hot?
-Bully Offers without a deposit cheque! Buyer comes back the next day renegotiating the deal because they know they paid 50k more and the seller’s know and are afraid to be firm and lose out.
I know that a lot of you must be thinking that the market is TOO CRAZY for your liking and that there is a BUBBLE that is just ready to BURST! Or perhaps that the market is WAY over priced and it’s only a matter of time that prices will correct or even worse a massive recession will hit. Or once interest rates SKY ROCKET the house values will plummet and we will all lose our shirts. There is a lot of speculation out there and a lot of PANIC. Buyers are panicing to buy something fast before interest rates go up or mortgage rules become more strict. Well……here is my opinion on Toronto’s high values…….
I believe that Toronto is the northern New York City. If you look at some of the most expensive places in the world i.e. New York, Bejing…you will notice that their income levels do not have any correlation to property values. Toronto’s ratio is getting farther and farther apart and I believe it will keep getting farther apart and eventually become similar to New York and these other expensive places. WHY? Because Toronto has everything one needs i.e. work, transportation, beach, concrete jungle, green neighbourhoods, great schools, top hospitals, growing population, no more land to build more, and many other economic fundamentals. I am actually seeing a trend of what many people believe is the opposite i.e. the retired are moving closer to the city versus farther away so they can be closer to the amenities they NEED i.e. Top Hospitals. They may not buy due to affordability so they may rent as most of city dwellers will do in the future as the Toronto income to property value ratio becomes even farther apart. Only the rich will own and rent out their homes to the mass who NEED to be in the city.
That is my opinion and what I believe the future of our city will become. Welcome to the future!