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Is Toronto real estate still a good investment?

1024 576 Nisha Muire
Investing in real estate in Toronto remains a good investment despite the market starting to slow down. Regardless of current market conditions real estate is always a solid investment because property will appreciate over a 10-year cycle. However, that said – real estate is definitely not for the faint of heart as there are many costs associated with housing that can make a huge dent in a budget if you are not properly prepared for it.

If you are looking to buy your principal place of residence a slow market is actually beneficial to you as pricing levels off and you are better able to get what you want at a price that is within your budget. Buying and holding on long-term will nearly always result in a positive investment. Where you run into potential risks is when you buy as a quick investment.

Many people buy believing that they can renovate the property and sell it again for a profit. Such an investment does require a fair bit of knowledge about the home renovations, relationships with contractors who are ready and willing to work on your project quickly and it also requires the funds to float the property and the renovations while also supporting the carrying costs of the home including the mortgage, taxes and utilities. In fact, this is where many novice real estate investors lose their footing. They miscalculate just how much it will cost to renovate and carry the property they have purchased. They also forget that there are tax implications in flipping homes in Canada.

If you sell a property within 2 years, the government will count the profit as business revenue and tax it as such and will also expect the HST to be added to it.

Those who are considering the purchase of investment property for rental purposes should make sure to structure their finances in such as way that they are able to support the mortgage and tax costs should they fail to find a suitable tenant for a month or more. Since real estate is not easily divested, it is important to consider all facets of the situations before jumping in. You must be prepared to ride the waves of the market and to understand that it might not always be smooth sailing. If you are ready for this, then you will certainly be able to walk away richer from a Toronto real estate purchase.


Nisha Muire

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