If you have been been following the development of Downtown Markham, you would have noticed the surge of residential condominium construction in the area. A cornerstone of the Smart Growth strategy used to plan Downtown Markham includes high density housing, including condominium buildings and townhouses.
Considering that the city’s housing was predominantly single family homes prior to the construction of Downtown Markham, the addition of new “urban” housing unit’s offers Markham home buyers a new lifestyle option, as well as a new investment opportunity.
In Toronto, almost one in four condo units (23%) are not occupied by the owner. Therefore, it is evident that condo investments are quite popular. Such an investment however, requires education and planning. If you are a first time investor and thinking of endowing in one of Downtown Markham’s new condo units, the following tips may be beneficial towards your preparations:
Be Prepared for the All the Costs
From a minimum of a 20% down payment, to potential HST’s on your purchase, first time investors are often surprised by the added expense of buying an investment property. A variety of further costs that one can expect may include taxes on capital gains and maintenance expenses.
You’re the Landlord
While newer condo units will generally require less maintenance than rental houses, many first-time investors are not ready for the responsibility of being the landlord. When something goes wrong, you will hear about it, fast.
Don’t Expect Quick, Easy Money
The real estate market in Markham has been substantially growing. With that being said, there is never a guarantee that your investment will escalate. Even throughout recent market gains, there have been periods of less-than-stellar performances. Remember to always take into consideration the patience and devotion needed in the process of buying and selling a condo unit.
Keep a Lid on the Upgrades
Many investors are tempted to promote new condo units, fixating on all the extras advertised by the developers, in hopes of making the unit more appealing to renters. Rental rates however, are dictated more by the location of the unit, not necessarily it’s ‘extras.’ It is unlikely for a seller to envisage making back the extra costs of a unit by charging more added rent.
If tenants are not lined up for your condo, be prepared for the carrying costs of the units without rental income. The difference between a good and bad tenant can determine the difference between a good and bad investment. Make sure to always interview potential tenants carefully and confirm a good Residential Tenancy Agreement. This will help ensure that you are aware of what your obligations are as a landlord. Becoming familiar with the Residential Tenancies Act will also be beneficial to new coming investors.
The pointers listed above are just a foretaste of what you will need to know and consider before buying a condo as an investment property. The more advanced you are in the background knowledge of the investment, the higher your chances are of getting a good return for your money.