Real Estate

Buying cash flow property Toronto

  • Last Updated:
  • Oct 29th, 2019 9:32 pm
[OP]
Newbie
Oct 23, 2019
1 posts

Buying cash flow property Toronto

Is it still possible to find cash flow properties in Toronto with minimum downpayment?
22 replies
Jr. Member
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Aug 11, 2019
177 posts
191 upvotes
Toronto
As an investment, minimum DP must be 20%. If you are chasing cash flow, there not be much appreciation.

30 year mortgages, with 11 payments a year instead of 12. Cashflow is possible.
Full Time Realtor
GTA & Surrounding Areas
Deal Fanatic
Mar 27, 2004
5477 posts
3350 upvotes
Toronto
you cant buy a investment property with less than 20%. with that said. getting pos cash flow from 20% down is difficult. usually you're looking at the 25 to 30% range to get cf neutral.
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Deal Addict
Feb 19, 2019
1149 posts
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Stouffville ON
With 20% down but possible but very difficult, you won't be getting much more than putting money in savings account, and you are foregoing price appreciation.
Check this condo E4587018, just sold for $310K, you can probably rent for $1,900, you should be slightly cashflow positive IF you don't have any vacancies, repairs or special assessments.

In general NO is the answer.
Full Time and Full Service Realtor
Sr. Member
Jul 7, 2019
665 posts
526 upvotes
Believe you can, buy a studio condo where the building allows short term rentals and list your unit on Airbnb. Charge a nightly rate that will allow you to be cash flow positive, assuming you wont get 100% vacancy per month. Although the government may be enforcing rules that will restrict short term rentals shortly.

Example: $480K unit 360sf studio condo. Put down $96K. Mortgage per month is ~$1850. Maintenance fees would be ~$250. Total monthly outflow is $2100. If you charge $200 per night, you will break even after renting this unit for 11 nights of the month. If you want to include cable, wifi, furniture, your break even will be a few more days. This is a basic example. But also, many ppl are in scenarios like this and renting out 20+ days per month, easily being cash flow positive.
Sr. Member
Dec 28, 2010
722 posts
304 upvotes
Toronto
MotoCross817 wrote: Example: $480K unit 360sf studio condo. Put down $96K. Mortgage per month is ~$1850. Maintenance fees would be ~$250. Total monthly outflow is $2100. If you charge $200 per night, you will break even after renting this unit for 11 nights of the month. If you want to include cable, wifi, furniture, your break even will be a few more days. This is a basic example. But also, many ppl are in scenarios like this and renting out 20+ days per month, easily being cash flow positive.
Serious question as I am not familiar with this.
How much % of monthly incoming $ would go towards airbnb fees, cleaning/upkeep, efforts is $ spent on getting it ready for quick rental. ? 25-30% ?
Deal Addict
Feb 19, 2019
1149 posts
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Stouffville ON
I think it would be very risky investing right now into Airbnb given the looming legislations.
I also don't think the numbers provided by Motocross tell the whole story, most small units in DT core have rates much smaller than $200, there is also property taxes, insurance, repairs not too mentions fees associated with hosting. A lot of people have made a lot of money with short term rentals, doubt it will be the same going forward considering the costs to get in and legislations.
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Jul 7, 2019
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Karma2000 wrote: Serious question as I am not familiar with this.
How much % of monthly incoming $ would go towards airbnb fees, cleaning/upkeep, efforts is $ spent on getting it ready for quick rental. ? 25-30% ?
It depends on how badly you want to be cash flow positive. If you have the time, you can clean the unit yourself, deliver the keys yourself, manage the unit yourself, without having to pay much more.
But time = money, and management companies charge ~20%, which includes cleaning.
Lastly, $200/night is an approximation. Core downtown studio units are charging $250+ per night.
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Dec 13, 2016
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senasena wrote: With 20% down but possible but very difficult, you won't be getting much more than putting money in savings account, and you are foregoing price appreciation.
Check this condo E4587018, just sold for $310K, you can probably rent for $1,900, you should be slightly cashflow positive IF you don't have any vacancies, repairs or special assessments.

In general NO is the answer.
No way in hell you can rent this ghetto condo for 1900 a month.

That being said if Toronto is awash with money why are people so obsessed about chasing no returns... Even if there is still a potential appreciation of 10% annually. This simply makes no sense to me.
Deal Expert
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Jan 27, 2004
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T.O. Lotto Captain
One agent suggested to me..
He said he has this broke ass condo in an extremely crime and poverty ridden area of Toronto.

He rents out the 3 bedrooms @ $500 a pop.
He split the living room into 2 rooms and rents them for $500 a pop.
Then the dining room got closed off for to turn into another small $500/month bedroom.

He’s getting $3000/month from the rent.
The condo only cost literally $150k. Literally.

He’s cash flow positive. Very positive.
And all the negative aspects of the type of tenants who would live in such a property... is very easily taken care of. Bad tenants are quickly removed and new ones are quickly moved in with little to no rent loss.

But i cannot and will not disclose why.
Deal Addict
Jan 13, 2014
1684 posts
601 upvotes
Calgary
UrbanPoet wrote: One agent suggested to me..
He said he has this broke ass condo in an extremely crime and poverty ridden area of Toronto.

He rents out the 3 bedrooms @ $500 a pop.
He split the living room into 2 rooms and rents them for $500 a pop.
Then the dining room got closed off for to turn into another small $500/month bedroom.

He’s getting $3000/month from the rent.
The condo only cost literally $150k. Literally.

He’s cash flow positive. Very positive.
And all the negative aspects of the type of tenants who would live in such a property... is very easily taken care of. Bad tenants are quickly removed and new ones are quickly moved in with little to no rent loss.

But i cannot and will not disclose why.
does he also wear a purple three piece suit with a fedora hat that has a feather in it?!?!
Newbie
Feb 4, 2014
60 posts
42 upvotes
Montréal
oasis100 wrote: you cant buy a investment property with less than 20%. with that said. getting pos cash flow from 20% down is difficult. usually you're looking at the 25 to 30% range to get cf neutral.
Not entirely true... certain properties you need min. 20% down, others are 15% down depending on the number of units and whether or not the mortgage will be insured. For example, you can buy an insured 5-Plex for 15% down and you may even amortize on 40 years :)
Deal Guru
Feb 22, 2011
10301 posts
12808 upvotes
Toronto
Yes it's possible, not to mention you can refinance after 5 years to reduce mortgage payment and increase cash flow further. Don't forget in addition to cashflow you get appreciation and mortgage paydown. Appreciation is both leveraged and compounding and mortgage pay down increases every month.

Example;

C4548394

Purchase 452000

Mortgage $1434 (30 year 2.54)
Maint fees $347
Property Taxes $139
Total $1920

Rents for 2k;
https://www.realtor.ca/real-estate/2122 ... g-westgate
Sr. Member
Jun 7, 2017
966 posts
722 upvotes
BC
notaslumlord wrote: Is it still possible to find cash flow properties in Toronto with minimum downpayment?
Hey RFD, got any guaranteed easy money plays?
Deal Addict
Feb 19, 2019
1149 posts
1578 upvotes
Stouffville ON
BiegeToyota wrote: No way in hell you can rent this ghetto condo for 1900 a month.
Building next door which is essentially the same quality in the last few months have rented 1 bdr units between $1,750 to $1,925, in this particular building I linked I don't see any 1 bdr rented but 2 bdr are renting at $2,000-2,100 per month.
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Dec 13, 2016
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senasena wrote: Building next door which is essentially the same quality in the last few months have rented 1 bdr units between $1,750 to $1,925, in this particular building I linked I don't see any 1 bdr rented but 2 bdr are renting at $2,000-2,100 per month.
Jesus wept if true.

Also, there is only $100 to $200 difference between 1 and 2 bed?

I predict 1 bed 30sqm without kitchen will become a norm soon.
Deal Addict
Jan 29, 2010
1180 posts
1114 upvotes
Toronto
BiegeToyota wrote: No way in hell you can rent this ghetto condo for 1900 a month.

That being said if Toronto is awash with money why are people so obsessed about chasing no returns... Even if there is still a potential appreciation of 10% annually. This simply makes no sense to me.
The return is the growth in equity as the mortgage is paid off given a cash flow neutral property, even when appreciation is at inflation.

To the OP's question, studio apartments in downtown TO are mostly cash flow neutral.
Deal Expert
User avatar
Aug 2, 2010
15193 posts
4942 upvotes
Here 'n There
MotoCross817 wrote: Believe you can, buy a studio condo where the building allows short term rentals and list your unit on Airbnb. Charge a nightly rate that will allow you to be cash flow positive, assuming you wont get 100% vacancy per month. Although the government may be enforcing rules that will restrict short term rentals shortly.

Example: $480K unit 360sf studio condo. Put down $96K. Mortgage per month is ~$1850. Maintenance fees would be ~$250. Total monthly outflow is $2100. If you charge $200 per night, you will break even after renting this unit for 11 nights of the month. If you want to include cable, wifi, furniture, your break even will be a few more days. This is a basic example. But also, many ppl are in scenarios like this and renting out 20+ days per month, easily being cash flow positive.
And they'll all be crying when interest rates increase...
Sr. Member
Jul 7, 2019
665 posts
526 upvotes
eonibm wrote: And they'll all be crying when interest rates increase...
You can always find negative reasons to not invest.
No risk, no reward.

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