Last week I came across this article in the Toronto Star written by Mark Weisleder whose headline claims that we are in a “Renter’s Market for Condos”. I had to scratch my head when I read that headline and I thought it was a typo. Reading through the article and the comments section was even […]
The following is an excerpt from an article I just published over at the Remax Condos Plus blog. Â We are still in a buyer’s market The sales to listing ratio to me is the most important statistic for the downtown condo market. In one single stat, you get a snapshot of how the entire […]
The August sales figures are out from the Toronto Real Estate Board. Here is what I found most interesting: 1. Sales:Listing Ratio Holds Steady Those of you who read my stuff often know that this is my favourite statistic. The sales to listing ratio held steady at 23% in August-the same number as July. Sales […]
Today the new Finance Minister Bill Morneau announced a significant change to the mortgage rules in Canada for property buyers. If you skip to the end of this article you can see more details into what the rule is exactly and how it breaks down, but if you are reading this you are probably a […]
When we are talking about investing in pre-construction condos, a leaseback agreement is when you buy a condo from a developer and the developer agrees to lease the unit back from when once it is completed for a pre-determined rate and for a pre-determined amount of time. The money is not paid in a lump sum at closing like a cash back, rather, it is paid out slowly each month just like a tenant who pays on the first of the month. The actual tenant pays rent to the developer who in turn pays you (the owner). The tenant may be paying an amount that is more or less than the leaseback amount but the owner always receives the leaseback amount guaranteed (even if the unit is vacant!)
2. Why are leaseback offers becoming so popular?
The pre-construction market is driven primarily by investors. The investors only goal is to make money on their investment. There are traditionally 2 ways to do this: through cash flow and through capital appreciation. Cash flow is when you rent out a property for more than it costs you to own the property. Capital appreciation is when you sell the property for more than what you bought it for. There has been a lot of talk about the current prices of Toronto condos not supporting positive cash flow with the traditional 20% investor down payment in place. These leasebacks are an attempt to lure investors by giving them not just positive cash flow, but in many cases, guaranteed positive cash flow for 1 or 2 years (assuming mortgage rates do not rise dramatically in the next few years).
The latest stats for the downtown condo market are now available from TREB. I won’t be doing a full blown analysis today but here is a snap shot of what the numbers say for the September 2012 results. Once again, this data is for the downtown condo market only. In short, the trend that […]
It’s no secret that I own a studio in Regent Park. In fact, it’s affectionately become known as “The Smallest Condo in Toronto“. At just 301 square feet, there’s nothing like it in Toronto. I bought that unit back in 2010. I took occupancy of it in 2011, and I’ve rented it out for the […]
There is a secret in the world of condo investing that most people have no idea about, but one that is a game-changer for those who understand what it is and how to use it for their benefit… If you already own an investment condo in Toronto, then what I’m about to tell you could […]
I know that most people who follow me and read this blog are probably not students of the Garth Turner school of economics, but a lot of the things that he brings up each day in his blog are certainly concerns for smart-thinking investors who are looking at the condo market right now. Garth […]
Insights
Myth Busters: Renter’s Market Edition
July 26, 2012 / by Andrew la Fleur / Insights
Last week I came across this article in the Toronto Star written by Mark Weisleder whose headline claims that we are in a “Renter’s Market for Condos”. I had to scratch my head when I read that headline and I thought it was a typo. Reading through the article and the comments section was even […]
Read more
July 2012 Condo Market Stats
August 8, 2012 / by Andrew la Fleur / Insights
The following is an excerpt from an article I just published over at the Remax Condos Plus blog. Â We are still in a buyer’s market The sales to listing ratio to me is the most important statistic for the downtown condo market. In one single stat, you get a snapshot of how the entire […]
Read more
Three Interesting Tidbits From The August 2012 Condo Market Stats
September 6, 2012 / by Andrew la Fleur / Insights
The August sales figures are out from the Toronto Real Estate Board. Here is what I found most interesting: 1. Sales:Listing Ratio Holds Steady Those of you who read my stuff often know that this is my favourite statistic. The sales to listing ratio held steady at 23% in August-the same number as July. Sales […]
Read more
Why Canada’s New Mortgage Rule is Great News for Condo Investors
December 11, 2015 / by Andrew la Fleur / Insights
Today the new Finance Minister Bill Morneau announced a significant change to the mortgage rules in Canada for property buyers. If you skip to the end of this article you can see more details into what the rule is exactly and how it breaks down, but if you are reading this you are probably a […]
Read more
10 Things Every Condo Investor Should Know about Leasebacks
September 10, 2012 / by Andrew la Fleur / Insights
1. What the heck is a leaseback?!
When we are talking about investing in pre-construction condos, a leaseback agreement is when you buy a condo from a developer and the developer agrees to lease the unit back from when once it is completed for a pre-determined rate and for a pre-determined amount of time. The money is not paid in a lump sum at closing like a cash back, rather, it is paid out slowly each month just like a tenant who pays on the first of the month. The actual tenant pays rent to the developer who in turn pays you (the owner). The tenant may be paying an amount that is more or less than the leaseback amount but the owner always receives the leaseback amount guaranteed (even if the unit is vacant!)
2. Why are leaseback offers becoming so popular?
The pre-construction market is driven primarily by investors. The investors only goal is to make money on their investment. There are traditionally 2 ways to do this: through cash flow and through capital appreciation. Cash flow is when you rent out a property for more than it costs you to own the property. Capital appreciation is when you sell the property for more than what you bought it for. There has been a lot of talk about the current prices of Toronto condos not supporting positive cash flow with the traditional 20% investor down payment in place. These leasebacks are an attempt to lure investors by giving them not just positive cash flow, but in many cases, guaranteed positive cash flow for 1 or 2 years (assuming mortgage rates do not rise dramatically in the next few years).
Read more
September 2012 Downtown Condo Market Snap Shot
October 4, 2012 / by Andrew la Fleur / Insights
The latest stats for the downtown condo market are now available from TREB. I won’t be doing a full blown analysis today but here is a snap shot of what the numbers say for the September 2012 results. Once again, this data is for the downtown condo market only. In short, the trend that […]
Read more
Why Every Investor Should Own A Studio In Regent Park
October 26, 2012 / by Andrew la Fleur / Insights
It’s no secret that I own a studio in Regent Park. In fact, it’s affectionately become known as “The Smallest Condo in Toronto“. At just 301 square feet, there’s nothing like it in Toronto. I bought that unit back in 2010. I took occupancy of it in 2011, and I’ve rented it out for the […]
Read more
The Number One Secret Most Condo Investors Don’t Even Know About
November 9, 2012 / by Andrew la Fleur / Insights
There is a secret in the world of condo investing that most people have no idea about, but one that is a game-changer for those who understand what it is and how to use it for their benefit… If you already own an investment condo in Toronto, then what I’m about to tell you could […]
Read more
5 Things Wrong With Garth Turner’s Post On Toronto Condo Assignments
November 16, 2012 / by Andrew la Fleur / Insights
I know that most people who follow me and read this blog are probably not students of the Garth Turner school of economics, but a lot of the things that he brings up each day in his blog are certainly concerns for smart-thinking investors who are looking at the condo market right now. Garth […]
Read more