Congratulations! You just bought a 2-bedroom condo in the heart of downtown Toronto as a real estate investment. You’ve achieved that Instagrammable goal of owning property in an area where you can take pictures with your friends in front of the CN Tower from your balcony. But most investors are still left to question how this decision will mesh with their overall financial strategy.
Let’s go back to your 2-bedroom condo. You’ve purchased it as an investment opportunity so let’s think through how you can optimize your cash flow. In the current market, the carrying costs (the sum of all your monthly costs like the mortgage payment, property taxes, etc.) are going to total around $3200-$3400/month. If your only option is to get a long-term tenant to rent your unit, they’ll give you around $3100/month.
Now this is where you may be thinking, “If that’s true then that means I’ll be losing around $100-$300 every month with my real estate investment”. This isn’t the real estate market of 15 years ago. Back in the early 00’s, you could get a (relatively) cheap mortgage and make it so that the money from a long-term tenant was higher than your carrying costs, effectively letting your condo pay for itself. Times have changed.
So if your only option is to get a long-term tenant to rent your unit, you’ll likely forgo around $100-$300 every month. And a lot of investors in the current market are okay with that. Condo prices have been rising dramatically and investors who speculate that the appreciation in the value of the asset will more than cover the monthly carrying cost deficits may believe that this is still a decent opportunity.
But you don’t have to be okay with losing money on your rental property every month. Instead of only getting $3100/month in the long-term rental market, you can turn to Guestable and the short-term rental market and average around $4500-$5000/month over 12 months. Guestable leverages platforms like Airbnb, Booking.com, Expedia, etc. to get you the most for your real estate investment on the short-term rental market. We also leverage the highly lucrative monthly rental market to fill your property in the low season. Our clients hand us the keys to their unit, and we handle everything else. From listing optimization to guest communication to facilitating cleaners between stays, we’ll take care everything, leaving you with the fun task of passively collecting income.
Modern Real Estate Investment
You don’t have to accept society’s norms for real estate investing in Toronto. Instead of making a decision that potentially limits your short- to medium-term cash flow, you can be averaging more than your carrying costs and using the increased cash flow to add to your overall financial strategy. We are currently managing properties across Toronto and other markets and our clients couldn’t be happier with their cash flow. Reach out to Guestable today to learn how we can help you with your real estate investment goals.
Note: The figures in this blog post represent market estimates from February 2018 and are based on historical data collected prior to this blog post’s release.