Are old condos good investments?
Leaping into the Toronto housing market can be overwhelming for first-time buyers, particularly when considering the steep prices of modern properties. As a result, many are turning to older condos as a more affordable option, intending to renovate and bring them up to contemporary standards.
We will discuss the pros and cons of investing in an older condo in Toronto and offer valuable insights and recommendations for those considering this path. So, let’s dive into whether older condos make suitable investments.
Advantages of Buying an Older Condo:
More Extensive Floor Plans: Older buildings often offer significantly larger floor plans than new developments. Spacious condos with two bedrooms, dens, and ample living spaces can be found, providing more room for comfortable living.
Opportunities to Add Value:
Renovating an older condo allows buyers to customize their living space to their preferences. With the help of contractors and designers, it’s possible to transform an older unit into a modern, personalized home, adding significant value to the property.
Pride in Ownership:
Older buildings often have a higher percentage of owner-occupied suites, creating a sense of community and pride in ownership.
Disadvantages of Buying an Older Condo:
Higher Maintenance Fees:
Older buildings may have higher maintenance fees due to ongoing refurbishments and necessary updates to common areas. Buyers should carefully review the status certificate to understand potential financial obligations before making a firm offer.
Lower Appreciation Rates:
Older buildings generally have lower appreciation rates than newer ones. While renovations can increase the value of an older condo, the overall appreciation rate may be lower due to building age and higher maintenance fees.
Tips and Advice for Buyers:
Ensure Permitted Renovations: When buying a renovated suite in an older building, it is essential to include a clause in the contract stating that all renovations were done with the condo board’s consent. Additionally, buyers should verify that the renovations were done with proper permits to avoid potential legal issues in the future.
Understand Financial Considerations:
While renovating an older condo can be financially rewarding, it is crucial to recognize that flipping condos may result in little profits. Buyers should carefully assess their financial goals and consider appreciation rates and maintenance fees before purchasing.
Seek the Sweet Spot:
Look for older buildings with reasonable maintenance fees in desirable locations. These well-located older condos can outperform newer developments regarding appreciation and buyer interest.
Advantages of Buying a New Condo in Toronto:
Purchasing a pre-construction condo offers the potential for future value appreciation.
However, evaluating the numbers and ensuring the investment makes financial sense before committing is essential.
Buyers can choose finishes, floor plans, and other design elements in pre-construction condos, allowing for a personalized living space.
Pre-construction condos can attract investors due to the potential for returns and the ability to analyze the project’s profitability before completion.
Disadvantages of Buying a New Condo:
Waiting Game: Buying pre-construction means waiting for the project to be developed, which can take several years.
When deciding between buying an older condo or a new condo in Toronto, buyers must carefully consider their priorities and financial goals. Older condos offer larger floor plans, customization opportunities, and a sense of community, while new condos provide built-in equity and the ability to personalize finishes. By weighing the advantages and disadvantages, buyers can make informed decisions that align with their needs and preferences in the ever-evolving Toronto housing market.