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).
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 […]
This is Maxwell. Maxwell is an entrepreneur and he lives in Oshawa with his wife and family. Maxwell was sick and tired of lackluster returns on his investments in the stock market. His bank was offering him a paltry 1% to keep his hard-earned money sitting with them. Maxwell decided he’d had enough and wanted […]
Recently, I had a client ask me if it’s better to buy 3 or 4 smaller units for investment or 1 larger high-end type of unit. I started crunching some numbers for this client and the results were quite shocking. The $1M+ segment of the condo market is facing some serious challenges right now. Take a […]
So you are thinking about investing in a studio condo in Regent Park and you are probably wondering,how much do studio apartments (condos) rent for in Regent Park? And how much do they cost to buy? Are studios in Regent Park a good investment? As the owner of 2 studios in Regent Park, and a […]
One question that I have received from new readers a lot of late is, “Can I still make money investing in the Toronto Condo Market in 2014?” The answer is it yes, absolutely- BUT, you have to know when and where to invest. But Andrew, what about all this talk of the condo market slowing […]
There has been a lot of talk in the mainstream media about the fact that new condo sales are down significantly in the past year. This is a fact that I don’t dispute. In 2013, sales of new condos were around 14,000 (official numbers not out yet). One of the lowest numbers on record from […]
In my last article there was that I wrote that seems to have made an impression because a couple people have mentioned it to me. The line was, “you can buy a condo today in 2014 at 2011 pricing that will not be completed until 2018/2019.” In other words, buyers who are smart will recognize […]
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
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
Meet Maxwell
October 11, 2013 / by Andrew la Fleur / Insights
This is Maxwell. Maxwell is an entrepreneur and he lives in Oshawa with his wife and family. Maxwell was sick and tired of lackluster returns on his investments in the stock market. His bank was offering him a paltry 1% to keep his hard-earned money sitting with them. Maxwell decided he’d had enough and wanted […]
Read more
3 Shocking Facts About the $1M+ Condo Market
July 19, 2013 / by Andrew la Fleur / Insights
Recently, I had a client ask me if it’s better to buy 3 or 4 smaller units for investment or 1 larger high-end type of unit. I started crunching some numbers for this client and the results were quite shocking. The $1M+ segment of the condo market is facing some serious challenges right now. Take a […]
Read more
How Much Do Studio Condos Rent For In Regent Park?
October 23, 2013 / by Andrew la Fleur / Insights
So you are thinking about investing in a studio condo in Regent Park and you are probably wondering,how much do studio apartments (condos) rent for in Regent Park? And how much do they cost to buy? Are studios in Regent Park a good investment? As the owner of 2 studios in Regent Park, and a […]
Read more
Can I Still Make Money Investing In the Toronto Condo Market in 2014?
January 13, 2014 / by Andrew la Fleur / Insights
One question that I have received from new readers a lot of late is, “Can I still make money investing in the Toronto Condo Market in 2014?” The answer is it yes, absolutely- BUT, you have to know when and where to invest. But Andrew, what about all this talk of the condo market slowing […]
Read more
The One Thing That All The Top Selling Toronto Condo Projects Have in Common
January 17, 2014 / by Andrew la Fleur / Insights
There has been a lot of talk in the mainstream media about the fact that new condo sales are down significantly in the past year. This is a fact that I don’t dispute. In 2013, sales of new condos were around 14,000 (official numbers not out yet). One of the lowest numbers on record from […]
Read more
Why 2014 Will Be The Best Year Since 2009 To Buy A Condo In Toronto
January 22, 2014 / by Andrew la Fleur / Insights
In my last article there was that I wrote that seems to have made an impression because a couple people have mentioned it to me. The line was, “you can buy a condo today in 2014 at 2011 pricing that will not be completed until 2018/2019.” In other words, buyers who are smart will recognize […]
Read more