TOP 3 WINNING NEIGHBOURHOODSBy CondoWong Saturday July 27, 2019
Which area in Toronto is the best for condo investments?
Downtown. Hands down.
Wait a minute, I need to rephrase the question so it makes more sense.
Which area in Toronto is the best for condo investments within your budget?
I have a very simple rule. It’s called the 4-5-6 rule.
If you have $450K,...
The key is to pick the best within your budget.
Let me share with you, the top 3 areas to invest in Toronto with a 4-5-650,000 dollar budget.
First of all, let’s define our budget. The most powerful part of a real estate investment is getting the bank to invest together with you.
You leverage a majority of the money from the bank, typically 80%.
So when we say a budget of $450,000, $360,000 comes from the bank and you’re actually only paying $90,000.
For a $550,000 investment, you will need $110,000 from your pocket. For $650,000, you will need $130,000.
You see, for every extra $20,000 that you put in, your investment value increases by $100,000. That’s the power of leverage.
Of course, the amount varies depending on how much the bank qualifies you for. There are also different types of lenders that we can leverage money from. That would be a topic for a different video.
For now, you get the basic idea on how to work out your budget.
To simplify our discussion, I’m just going to focus on the price of a 1 bedroom unit.
A studio is roughly $100,000 cheaper. A 1+Den is roughly $100,000 more and 2 bedroom another $100,000 on top.
So let’s start with the smallest investment, $450,000 1 bedroom. Where should you buy?
In the Greater Toronto Area, GTA, there are actually 25 municipalities. We are only going to focus on the central GTA.
In last week’s video, we learned that the younger generation is shifting to a car-less or car-share lifestyle. So it is crucial for you to invest along the subway line.
If you missed last week’s video, click WATCH NOW.
Let’s remove all the areas that are not accessible by the subway.
I’m going to remove the green subway line as well because it runs through older areas in the city of Toronto and these areas would require some revitalization.
Now you can clearly see that Vaughan is the only municipality outside of the City of Toronto that is accessible by the subway.
You’ve probably heard this phrase many times: “If you want a cheaper option, you need to go outside the City of Toronto”.
But where? Isn’t the answer obvious?
If your budget is $450,000, Vaughan Metropolitan Centre is the place to be.
The subway station opened on December 17, 2017.
The KPMG commercial tower is now well in operation. Numerous condo towers around the station will be ready for occupancy in the coming year.
The city of Vaughan projects that by 2031, the new Vaughan downtown will have 25,000 residents and employment for more than 11,000 people.
I think you can easily picture that the new subway and new developments are going to open up a lot of opportunities for growth and appreciation.
Let’s move on to $550,000. I would recommend midtown Toronto.
By midtown, I mean either North York or Yonge & Eglinton.
These areas are already pretty well developed with a lot of neighbourhood amenities and existing condo towers.
Developers love to build onto these classic winning neighbourhoods for obvious reasons so there are still lots of ongoing and future developments in the areas.
These areas are all very stable to invest into, the exact area you pick depends on the opportunity available at the time.
In general, these areas have similar characteristics and potentials.
If you can afford $650,000, downtown.
That’s where all the jobs are. World class companies, universities, hospitals, restaurants, shopping center…everything.
Central Downtown Toronto is where you will find the highest density and housing demand in Canada.
Let me define what I mean by central downtown.
North to Yorkville.
South to the Lake.
East to Parliament.
West to Spadina.
This is my golden square.
Land is running out within the golden square.
What does scarcity mean?
High price. Anyone who is holding a piece of land in this golden square is literally like holding gold.
It has become very hard for developers to acquire land and obtain city permissions to build within this golden square.
So if you can still find something within your budget in the golden square, go for it!
There you go. When in doubt, go by the 4-5-6 rule.
So you may ask, if you have $650,000, should you go for a 1 bedroom in downtown or a 2 bedroom in Vaughan?
If it’s your first investment, always go for downtown.
If you’re looking to diversify, you’ll be fine with any of the 3 areas.
If you need advice on where and what type of unit you should invest in, you can schedule a call with me.
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