I received a phone call this morning from an old friend who also happens to be a reader of my Thursday Soup newsletter. After exchanging pleasantries and a little small-talk, we began to chitchat about real estate.
“Stevie, it seems lately your focus has been on investors –with all the pre-construction condo launches you’ve been sending out…”
I paused to reflect for a moment only to realize that although investors do make up a chunk of pre-construction buyers, the picture lately has been changing.
Recently, a client, let’s call her Mary, purchased a 2+den unit with her partner in the midtown area. The project is slated for completion in 2018. The couple will be retiring in around 4 years and felt they no longer needed 3,400 square feet of living space.
As Mary described it, climbing stairs, maintaining a sizable home and the upkeep of a large back yard– no longer ranked highly on their list of priorities.
Meet David. David was born in Toronto but resides in Hong Kong. He purchased a 1+den pre-construction unit for his daughter who will be moving here in hopes of completing a Master’s Degree in 2017.
Before he took the plunge, David and I spent time (often via Skype & Email) crunching the numbers. To sum up, his daughter plans to reside in Toronto up to 2 years after graduating from her two year Masters Program.
If she decided to rent a condo instead of buying, throughout that period, total rent paid out would amount to over $84,000 (based on a $1,750/month lease). Let me state the obvious, rent is not recoverable.
That $84,000 figure, according to our calculations, would be $12,000 MORE than the down-payment needed on the 1+den unit purchased. Moreover, the 20% down payment required is spread out over a three year period so David has time to build up and draw from his pool of savings.
Even with a conservative annual appreciation of only 3%, the value of David’s unit (purchased at $360,000) would have gone up by nearly $30,000 in just 4 years.
David & Mary do not fit the typical investor profile. When I speak to colleagues, the same theme is emerging, ordinary folks thinking long term and taking control of their financial future by investing in real estate.
What’s on today’s Thursday Soup menu? Last week I wrote about Minto West Side Condos coming to Front & Bathurst. Yesterday I attended the Exclusive VIP broker launch kickoff event. Click HERE or the image below for the goodies i have in store!