Category: Articles (8)

Freed Development and Elad Canada is launching Phase 1 of Galleria on the Park September 10th, 2019.  This exciting project is part of the cities Master Plan to revitalize the Dupont & Dufferin corridor, which has been known for its creativity and voice for artistic expression.  With several established businesses already in the location, the Master Plan is to bring modern retail, office and condo living space to the community.

 

DEVELOPMENT DETAILS

Project Name:  Galleria on the Park Condos
Developer: Freed Developments & Elad Canada

Address:  Dufferin St, Toronto
Major Intersection:  Dufferin St & Dupont St
Architect:  Hariri Pontarini Architects and Core Architects

Release Date: Sept 10th
Building:  12 new buildings
Units:  3416 new condo units

Maintenance Fees: $0.60/sq.ft Including:  High Speed Internet & Elad Link
Taxes:  Approximately 1%
Locker: $5,500
Parking:  $60,000
Estimated Completion:  Fall 2023

 

Platinum Deposit Structure – Buy with Only 15% Down Until Occupancy

5% in 2019

10% in 2020

5% at Occupancy

 

VIP Incentives

  • Capped Dev. Fees at $10000 for studio/1BR /1BR+ and $15,000 for 2BR and larger
  • Right to lease during occupancy
  • Free Assignment
  • Free flex sliding glass door

Master-Planned Community

 

CONDOS ON THE PARK

Situated at Dufferin and Dupont, Galleria on the Park offers a modern urban lifestyle. This new condominium development will overlook an extended and reconfigured Wallace Emerson park. Expansion plans include doubling the size of the community centre to 95,000 sq. ft., making it one of the largest in the city and expanding the park to nearly 8 acres. With added infrastructure including cycling lanes, it’s no wonder this new community will be the centre of activity in Central West Toronto.

 

CREATIVITY AT WORK

Look forward to approximately 20,000 sq. ft. of office space tailored to meet the demands of the rising creative and tech booms in the city. A heightened design focus, applied to layout and flow, blends modern convenience with creativity.

 

MODERN RETAIL

With nearly 300,000 sq. ft. of retail, Galleria on the Park offers a fresh look at the retail experience to complement existing favourites. Drawing inspiration from the artisanal renaissance in the area, the planned retail reflects the original and specialty offerings that make them one of the main attractions in Toronto’s new Dupont. With fitness and lifestyle retailers, healthy on-the-go dining options and park on the premises, there’s no better place to be actively inspired.

 

HIGHTLIGHTS

 

Walk score of 91/100

Transit score 84/100

Located in Dovercourt-Wallace Emerson-Junction Toronto

TTC stops at the front door and less than 20 minutes ride to downtown Toronto

Less than 15 mins away from 2 subway stations and UP Express

30 mins ride to Hospital for Sick Children, Mt Sinai Hospital, and Toronto General Hospital

30 mins ride to Financial District

Within 30 mins ride to UofT, Ryerson University, George Brown College, OCAD

20 mins drive or 17 mins UP Express ride to Toronto Pearson International Airport

Easy access to Gardiner Expressway

 

How to Purchase a Unit:

Floor plan and price list are available

Unit selection will be on a first come first serve basis.

Click HERE for price list
Click HERE for Floor Plan
Click HERE for Brochure
Click HERE for Investor’s Kit

 

If you have any questions, feel free to email, text, or call me at 647-895-8945 or 647-829-6969.

 

SUMMARY: 

  • Lifetime Developments team up with CORE Architects to create two incomparable buildings rising 14 storeys at the edge of Liberty Village

  • Luxurious suites await you and the indoor and outdoor amenities will be highly desirable. XO Condos will truly be a remarkable condo with gorgeous features and coveted finishes.

  • XO Condos will offer residents direct access to the King-Liberty Pedestrian Cycle Bridge and the proposed King-Liberty Smart Track Station. 

DEVELOPMENT DETAILS

Project Name:  XO Condos
Developer: Lifetime Developments

Address:  1221 King Street West, Toronto
Major Intersection:  Dufferin St & King St W
Architect:  Turner Fleischer and Core Architects
Storeys/ Units:  14 Stories/297 Units
Maintenance Fees: TBD
Taxes:  TBD
Locker: TBD
Parking:  TBD
Estimated Completion:  Summer 2022

15% Deposit Structure

$5,000 Upon Signing
Balance of 5% in 30 Days
5% in 370 days
5% in 540 days
5% on occupancy

VIP Incentives

  • Free $10000 – $20000 Credit on Closing
  • Free Assignment
  • Capped Dev. Fees at $10000 for 1BR and $15,000 for 2BR and 3BR
  • 100/100 Transit Score
  • 14 Story condo
  • Adjacent to Liberty Village
  • Close to the Exhibition Place
  • Close to fashionable and lively Queen West District
Pricing:
  • Unbeatable pre-construction prices almost at par with re-sale condos in the same area
Layouts:
  • Excellent layouts that allows the use of den as a secondary or tertiary bedroom
  • Projected Cash-Flow Positive upon property completion

HIGHTLIGHTS

  • Walk score of 93/100
  • Transit score 100/100
  • Located in South Parkdale, Toronto
  • 5 mins walk to King St W streetcar and less than 20 minutes ride to downtown Toronto
  • 7 mins walk to Liberty Village
  • 11 mins walk to Canadian National Exhibition (CNE)
  • 20 mins ride to Hospital for Sick Children, Mt Sinai Hospital, and Toronto General Hospital
  • 20 mins ride  to the Union Station
  • 20 mins ride to Financial District
  • Within 30 mins ride to UofT, Ryerson University, George Brown College, OCAD
  • Easy access to Gardiner Expressway

 

Rental Rates:

1BR + Den and 2 Washrooms (Conversion of Den to 2nd Bedroom)

Pricing: $685,900

Current Rent: $2800

Projected Rent: $3276

2BR + Den and 2 Washrooms (Conversion of Den to 3rd Bedroom)

Pricing: 920,900

Current Rent: $3600

Projected Rent: $4211

 

How to Purchase a Unit:

  • Floor plan and price list are available.
  • Unit selection will be on a first come first serve basis.

Click HERE for price list
Click HERE floor Plan
Click HERE for Volition Investor’s Kit

If you have any questions, feel free to email, text, or call me at 647-895-8945 or 647-829-6969.

 

EXECUTIVE SUMMARY:  WHAT IS SO SPECIAL ABOUT THIS PARTICULAR CONDO PROJECT?

 

  • BEST SUITED FOR OWN USE.  While the area and location is amazing, and while there are tons of infrastructure developments going on in the area (East Harbour, Google Smart City, etc.), this does NOT fit our traditional cashflow business model, and thus is most suitable for owner’s own use / end users.
  • LARGE UPSIDE POTENTIAL.  Although it’s not our traditional cashflow business model, we still believe in the area and the upside growth potential of this development, the business model is just slightly different and slightly more speculative if viewed as an investment, which may still suit certain investor profiles.
  • VIP ACCESS.  We have VIP early access to this project because of our relationships with the developers.

*Location: Regent Park which is beginning Phase 3 of a 5-Phase Master Gentrification Plan.

*Nearby Developments (East Harbour): 15 mins walk from the massive East Harbour master planned office/retail mixed use development (50,000 new jobs)! www.eastharbour.ca

*Nearby Developments (Google Smart City): 20 mins walk from future revitalization of Eastern Waterfront by Google Smart City (50,000+ jobs)! www.sidewalklabs.com

*More details available in the Volition Investor Kit PDF.

 

DEVELOPMENT DETAILS

Project Name:  River & Fifth
Developer: Broccolini

Address:  5 Defries St Toronto 
Major Intersection:  River St & Queen St
Architect:  Graziani + Corazza Architects Inc
Storeys/ Units:  37 Storey/580 Units
Maintenance Fees: TBD
Taxes:  TBD
Locker: $7,000
Parking:  Standard $60,000, EV $65,000
Estimated Completion:  TBD

Deposit Structure

$10,000 Upon Signing
Balance of 5% in 30 Days
5% in 90 180 days
5% in 540 720 days
5% in 720  occupancy

International Deposit

$10,000 Upon Signing
Balance of 10% in 30 Days
10% in 180 days
10% in 540 days
5% on Occupancy

HIGHTLIGHTS

  • Transit score 99/100
  • Located in Regent Park, Toronto
  • 3 mins walk to Dundas St streetcar and less than 10 minutes ride to downtown Toronto
  • 3 mins walk to 6 acre Regent Park & Aquatic Centre
  • 6 mins ride to Ryerson University
  • 15 mins walk to St Lawrence Market
  • Within 15 mins ride to UofT, George Brown College
  • 15 mins ride to Hospital for Sick Children, Mt Sinai Hospital, and Toronto General Hospital
  • 20 mins ride  to the Union Station
  • 20 mins ride to Financial District
  • 25 mins walk to The Air Canada Centre
  • Easy access to Gardiner Expressway and DVP

 

How to Purchase a Unit:

  • Floor plan, price list and brochure are available.
  • Unit selection will be on a first come first serve basis.

If you have any questions, feel free to email, text, or call me at 647-895-8945.

 

EXECUTIVE SUMMARY: WHY SQ2 & WHY THIS PARTICULAR CONDO UNIT ASSIGNMENT?

  • Actual Unit Available.  The Volition team has an ACTUAL condo unit currently available for assignment, not just phantom inventory that “theoretically” may become available if an owner decides to assign it (like other agents/websites).
  • Highly In-Demand Location. Steps to King West, Queen West, Theatre District, Kensington Market; one of the hippest, most desirable areas of the city.  This neighbourhood is popular with Millennials because of work/live/play.
  • Low-Risk Profile.  This is a risk-mitigated investment due to the in-progress gentrification cycle of Alexandra Park (following the successful mixed-income model being carried out in Regent Park) and proximity to where the tenants’ jobs are located (i.e. downtown core, financial district, etc.)
  • High Walk Score.  Walk Score 100/100 “Walker’s Paradise”, Transit Score 100/100 “Rider’s Paradise”, Bike Score 75/100 “Very Bikeable”.  All important considerations to Millennials.
  • Best Tenant Profile.  Professional millennial, university educated, 2-5 years out of university, salary $60-80k/year, works in downtown core.  This tenant profile will be easy to manage and always pays their rent.
  • Cashflow.  Target rent is $2500, which is projected to be cashflow neutral.  As a point of comparison, normal resale condos in this area would easily be cashflow negative by $200-400
  • Discount Pricing.  Roughly $950/sqft, while other resale condos in the area are $1000/sqft+, and other preconstruction condos in the area are $1200sqft+
  • Reputable Builder.  Tridel.  Nothing more needs to be said.  Tridel has been building homes for over 8 decades. With over 80,000 homes built in Toronto, it’s safe to say with Tridel comes a high-level of quality and a high standard.

 

VIP Investment Calculator

 

With the success of the SQ Towers at Alexandra Park, trusted Toronto developer Tridel is unveiling SQ2, the second phase of the SQ Condos series. This is the second phase of a multi-phased series by Tridel with the revitalization of the Alexandra Park neighbourhood. Tridel is working on revitalizing this Queen West neighbourhood and raising the standard with high quality features and finishes.

One of the coolest neighbourhoods in the world according to Vogue Magazine. Vogue called this West Queen West Neighbourhood: trendsetting. SQ2 located at Queen and Spadina is in the midst of this booming, trendy neighbourhood that is getting global recognition for its contribution to art, culture and green space.

SQ Condos at Alexandra Park, the first phase, had a sleek, modernistic design which incorporated a very futuristic touch. SQ2 will have this similar iconic design that will stand out in the capital of Toronto’s most cultural neighbourhood.

 

Development Details:
Project Name: SQ2 at Alexandra Park
Developer: Tridel
Location:  Vanauley St
Major Intersection: Queen & Spadina
Architect: Teeple Architects
Storeys/Units: 14 Storey/169 Units
Est. Taxes: 1% of price / year
Est. Maint: $0.62 / sq ft / month (First Year Free)
Est. Occupancy: Fall 2019

 

Condo Unit Details:
Price: $545,000
Bedrooms/Baths: 1bdrm/1bath
Sqft: 574sqft
Balcony: Y
Floor: 11
Views: West (unobstructed)
Initial Deposit Required: $85,000
Remaining Deposit Required (at close): $24,000
Mortgage Required at Close: $436,000
Est. Closing Costs: $14,750 Land Transfer Tax + $8362 Levies (capped) + $1000 lawyer + $500 appraisal = $24,612
Est. Occupancy Date: Nov 13, 2019
Est. Closing Date: Spring 2020
Rent: $2500
Expenses: $210 property taxes + $355 condo fees + $1946 mortgage (80% LTV, 3.45%, 30yr) = $2511
Cashflow: -$11


Floorplan:

 

 

How To Purchase A Condo Assignment:

  • Buying the right condo assignment can be an extremely lucrative investment opportunity, but the process can be fraught with PITFALLS if you don’t know what you’re doing.
  • Assignments are not as straightforward as buying resale or preconstruction.  The assignment contract is extremely complicated and needs to be structured PROPERLY.
  • You need to work with an Investor Realtor who thoroughly understands the process and knows how to do assignments, or you could be opening yourself up to SIGNIFICANT risk.
  • The Volition team has bought & sold many assignments both personally and for our clients, and is quickly becoming the MARKETPLACE for assignment deals.
  • If you are interested in Condo Assignment, contact us for a FREE 60-minute Advisory Session where we will walk you through the ins & outs of buying a PRE-ANALYZED Condo Assignment from our inventory of assignments OR selling your Condo Assignment to one of our PRE-QUALIFIED buyers

 

Watch A Short Video on Assignments From Our Jan 2019 Meetup Mastermind

If you have any questions, feel free to email, text, or call Sam at 647-895-8945.

 

 

WHAT IS SO SPECIAL ABOUT THIS PARTICULAR CONDO PROJECT??

  • Located right beside the MASSIVE Toronto Eastern Waterfront redevelopment (next 25 years, $30 BILLION of funding, 40,000+ new residents)
  • NEXT DOOR to the GooglSmart City development by Sidewalk Labs (50,000+ jobs, new Google HQ)!
  • Steps from the East Harbour development60-acre master planned commercial/office/retail development the size of Yorkdale Mall and new Transit Hub for the Downtown Relief Subway Line (50,000+ jobs)!
  • 15% Deposit Structure within 1 year
  • Volition’s take:
    • We cannot stress ENOUGH how much of a GAME-CHANGER the Eastern Waterfront is.  And this condo project is located literally in the heart of the entire redevelopment.
    • At ~$1100/sqft, still offers tremendous value vs. nearby condos ($1200-1500/sqft+)
    • Check out the INVESTOR KIT for further details.

Lake Suites
Platinum Price List, Floor Plan are Available!

Investing in Toronto’s leading waterfront community.
Toronto’s waterfront is the largest urban redevelopment project currently underway in North America, and its revitalization is expected to take approximately 25 years and $30 billion of private and public funding to complete. This transformation will be home to over 40,000 residents, one million sq. metres of employment space and 300 hectares of parks and public spaces.
Development Detail:
Project Name:  Lake Suites
Developer: Greenland
Location:  Lake Shore Blvd E, Toronto
Major Intersection:  Lake Shore Blvd E & Lower Sherbourne St
Architect:  Hariri Pontarini Architect
Storeys/ Units:  39 storey
Maintenance Fees: TBD
Taxes:  0.9% of total purchase price
Locker:$7,500
Parking:  $65,000 (Available for 2 Bedroom and Larger only)
Estimated Completion: July 2022

PLATINUM INCENTIVE- FIRST TWO WEEKS ONLY
*Extended Deposit Structure
*Free Assignment (Value $5,000)
*Right to Lease During Interim Occupancy
*Capped Development LeviesExtended Deposit Structure
$5,000 on Signing
Balance to 5% in 30 Days
5% in 180 Days
5% in 365 Days
5% in April 1, 2022
5% on Occupancy

Highlights

  • Walk score of 93/100
  • Transit score 98/100
  • Located in the Waterfront Communities – The Island
  • 5 mins walk to Dockside Dr at Queens Quay East streetcar and less than 15 minutes ride to downtown Toronto
  • 5 mins walk to Corus Entertainment, Sugar Beach, Loblaws
  • 10 mns walk to St Lawrence Market
  • 15 mins walk to The Distillery Historic District
  • 15 mins ride to Ryerson University, UofT, George Brown College
  • 15 mins ride to Financial District
  • 20 mins ride to Hospital for Sick Children, Mt Sinai Hospital, and Toronto General Hospital
  • Easy access to Gardiner Express Way and DVP
  • Less than 15 mins walk to Union Subway Station, the Go Transit, ACC and more.

Rental Rate:
1 Bedroom  from $2000 – $2400
1 + 1 Bedrooms from $2500 – $2800
2 Bedrooms from $2800 – $3600

How to Purchase a Unit:

  • Platinum price list and floor plans are available!
  • Unit selection will be on a first come first serve basis.

Click HERE for price list
Click HERE for floor plans
Click HERE for brochure
Click HERE for investor’s kit
Click HERE for Worksheet

If you have any questions, feel free to email, text, or call me at 647-895-8945.
_______________________________

Volition Properties Inc.
(647) 895-8945
info@volitionprop.com
www.volitionprop.com
**REIN Buyers Group’s Preferred Toronto Investor Realtor Team
**Certified Real Estate Investment Advisors (REIA)
**Silver Award Winners from the Canadian Real Estate Investment Network (REIN)
**Featured in the February 2015 edition of the Canadian Real Estate Investment (REIN) Magazine.

Investing in Toronto Preconstruction Condos 101.

What should I invest in? Houses vs. Resale Condos vs. Preconstruction Condos.

Preconstruction condos have their place in real estate investing.  If you’ve worked with the Volition team, or if you’ve attended our meetups, you’ll know that we preach that freehold (i.e. land) is generally the best investment.  But land comes as a price… both in terms of monetary perspective and from a time/energy perspective.

Condos are easy.  You buy a condo, and if it’s in a half-decent location, it’s easy to rent it out, and it’s easy to manage it.  The building itself and the amenities is largely taken care of by the condo property management.  Your unit is generally fairly new and thus not likely to run into too many issues.  And if you’ve chosen your location carefully, you should be able to attract what we consider to the our A+ tenant profile (millennial, a couple of years out of school, making $60-80k, working for a large firm in downtown Toronto, etc.).  And again, if you’ve chosen a good location, then the economic fundamentals of the area will support economic growth, job growth, population growth, etc.  Pretty straightforward.

Houses are a bit trickier.  Funny enough, the reason you want to buy a house is not actually because of the house… It’s because of the land.  It’s the land is that is the appreciating asset.  The building is actually a depreciating asset, because it gets older over time.  But the hard part is that land is generally not an income generating asset (with the exception of a few use cases, like mobile home parks, etc.).  So you need a building on top of the land in order to generate some income.  And then you need to lease out that building in order to cover your expenses and hopefully generate some positive cashflow.  So now, not only are you managing tenants, but you now have a building that you are having to take care of and worry about.  Generally, freehold/land/houses have been a better investment in Toronto over the past 10-20 years (and even longer), averaging a 10% compound growth over the long term… this is why the nice Italian grandma who lives next door who bought her house for $20,000 40 years ago now owns a property that is worth $1.2M… (Recall the “Rule of 70”: at 10% growth, it will take 7 years for prices to double.  At 7% growth, it takes 10 years to double).  So here we go, $20k -> $40k, $40k -> $80k, $80k -> $160k, $160k -> $320k, $320k -> $640k, $640k -> $1.28M.  That is 6 doubling periods, which is equivalent to 42 years at 10% growth.  Therefore, I’ve just been able to prove that Toronto houses grew at 10%. QED.

Condos, on the other hand, have grown at about 7% compounded over the past 10 years.  That’s not bad either.  A real life example is the preconstruction condo I bought in 2008.  I bought it for $295k and a recent comparable sold for $550k in 2018.  That’s roughly a doubling period of 10 years, which generally equals a 7% growth.  QED.  Also not bad, considering at a 20% downpayment, a 7% growth actually equates to a 35% return annualized.

More specifically, I bought it in 2008, and it wasn’t built and I didn’t take possession until 2012.  It normally takes 4-5 years for a preconstruction to be built.  When I took possession, it was worth about $350k.  So at 7% growth applied between 2008 and 2012, that figure ends up being $387k.  The difference between the figures is accounted for due to the fact that condos were not very hot during that phase, so it was only closer to 5% growth.  Condos in the last couple years (2017-2018) really took off for a variety of reasons (I’ll leave that for a future article), so the growth in condos in 2017 and 2018 has been closer to 10%, which picks up the slack.

That was the background info.  Ok, now to preconstruction.  Why is preconstruction a good idea?

I’ll sum it up quickly.

 

Why Preconstruction Condos?

  1. Resale is cashflow negative.  Condos right now are generally cashflow negative at 20% down (there are a few exceptions, but this is the general rule).  Cashflow negative is bad for many reasons.  It means that you are continuing to fund your investment out of your own pocket.  It also makes it harder to get financing for your next property because of your Debt Servicing.  Real estate is supposed to work hard for you, not the other way around!  It literally means that you have to work harder at your job just to keep your investments afloat!
  2. Potential for positive cashflow.  Rising rents allow for preconstruction to be cashflow positive after the building is constructed.  Rents rose 10.7% in Toronto last year according to Toronto Star or 15.7% according to Toronto Storeys, so if you grow current rents at even just 3-4% for 5 years, you’ll be into cashflow positive territory by the time you take possession.
  3. No tenants. As per a previous article we wrote entitled “Why Invest in Toronto“, tenants are the BIGGEST RISK TO YOUR BUSINESS!  It’s not “the market”, or interest rates, or Trump, or any one of the thousand things that regular average joe investors think… quite simply, it’s tenants.  Preconstruction allows you the luxury of not having to deal with tenants for 4-5 years while the building is being built.  AWESOME.
  4. Delayed Deposit Structure.  Most preconstruction condos have a delayed deposit structure, with 5% initially, then 5% in 90 days, 5% in 270 days, 5% in 720 days, or some variant.  This means that you don’t need all the capital upfront.  In fact, some developers (i.e. one developer in particular that we are working with and are Platinum VIP Brokers for) are offering an INSANE deposit structure: 5% initially, then $1000 a month until you make up another 5%.  For example, for a $600k 2bdrm, this would be $30k initially, then $1000 a month for 30 months.
  5. Mortgage.  As investors, the biggest roadblock we all face, at one time or another, is financing.  Some will hit their financing wall earlier, some later, but everyone will hit it eventually.  Preconstruction offers a way to continue to invest, and not have to continue to qualify for mortgages.  You don’t need a mortgage until the condo registers (i.e. 4-5 years down the road), which is amazing.  This can be great if you have too many mortgages already.  This also can be great if you cannot qualify for a mortgage right now, but anticipate that you will be able to in the future (new to Canada, bruised credit because of divorce, new job, don’t make enough salary now but will in the future, etc, etc, etc.  There are a dozen different use cases that follow under this category).  Also, precon doesn’t hit your credit bureau, so you could potentially buy preconstruction, and then CONTINUE to invest in regular buy-and-hold investment properties that need mortgages.
  6. VIP pricing/incentives.  As Platinum VIP Brokers, we have early ground-floor access to projects.  This is important, because it can often mean built in equity as soon as the NEXT phase is released.  We recently had one client purchase a preconstruction 800sqft condo at $1000/sqft, and within 3 months, the next phase pricing was released at $1200/sqft.  He made a paper gain of around $160k in 3 months, without hardly lifting a finger (well, he did have to sign his cheques, I suppose).  This is obviously not guaranteed, nor a typical case, but it can happen.  A more typical scenario is the price-per-sqft goes up maybe $25-50 for the next phase… but either way, it’s built in equity.  And then there’s the regular incentive crap that most people buy into… upgraded countertops or something like that.
  7. Today’s pricing. This ties into #1 and #2 above.  You are buying at today’s prices and will be getting tomorrow’s rents.  The problem with #1 above is that you are buying at today’s prices and getting today’s rents.  If you were able to get today’s rents and you bought at yesterday’s prices (i.e. you bought years ago), then you could also be in cashflow positive territory.  And in terms of valuation, you’re buying at today’s prices for a future built condo unit (which is traditionally worth more after it’s built).  Why is it worth more after it’s built?  I could write an entire article on why, but to keep it short and sweet, it’s because of expensive developer financing (the “mezzanine” financing in the early stages of a condo project is very expensive, and only after pre-selling 60-70% of a building can they switch over to a triple A lender at triple A lender rates).  Also, it’s due to uncertainty… you are only buying a piece of paper, a contract.  At the presales stage, you aren’t actually buying a unit.  So you don’t know if it’s actually going to be built, or if the developer is going to go bankrupt, etc.  Also, you don’t have a physical unit to inspect prior to purchase.  You are HOPING that it will be built like you think it will be, and as per the floorplans and feature sheets.

Because of some of these aspects, some investors tend to think that preconstruction condos are just for speculators, and that they don’t fall into the tried-and-true buy-and-hold investing model.

I disagree.  At the end of the day, real estate investing is all about identifying risk, figuring out your strategy, and mitigating risk.  There is definitely an element of uncertainty, but that uncertainty can be mitigated thru careful research and location selection.

For example, one of the areas that the Volition team is helping our clients with is in the Eastern Waterfront area.  Why?  Two words: Google Smartcity (or three words if you think that Smart City are two words).  Technically, it is Sidewalk Labs (Google’s sister company), but for all intents and purposes, we can think of them as Google.  They won a proposal from the City of Toronto to develop the eastern waterfront called Quayside, which is an area just east of Parliament and south of Lakeshore.  It’s potentially a gamechanger, with 50,000 new jobs, and the new Google Canadian HQ will be going in there as well.  You can read a descriptive Globe & Mail article about Google Smartcity here.  So we naturally selected a preconstruction development right beside it.  Boom.

And even in the event that everything falls thru, the City of Toronto has mandated that it will be developing that area.  So even if it’s not Google who’s going to be developing it, someone will be.  And if it’s not that… George Brown is near there, Corus is nearby, it’s close to downtown, it’s near other developments and condo buildings that are already more expensive on a $/sqft basis meaning it still has upside potential.  And the area is definitely going to continue to gentrify.  And it’s still proximity to Distillery District, and to East Harbour (50,000 new jobs, new transit hub).  These are types of defensive measures that we take to mitigate “market” risk (again, refer back to our Whitepaper for the 4 Types of Risk in Real Estate Investing).

 

Ok, you’ve convinced me.  What do I do now?

So now we know why Preconstruction fits in as a investment strategy into your overall business strategy.  But how do you actually execute?

Buying Preconstruction is not actually as easy as it sounds.  It’s actually very challenging… if you aren’t working with the right agent.  I know it sounds cliché… and maybe it is.  But it’s also very true.  When trying to get early access and ground level pricing, developers in Toronto only give a select number of Platinum VIP agents access to units.  This is called “allocation”.  This is often because of that agent’s reputation and relationship with the developer.  So if you wanted to walk in off the street and get access to VIP pricing, good luck.  Similarly, if you wanted to work with your brother or aunt or sister-in-law’s chiropractor who is an agent on the side and wanted to get access to the best possible deals and best possible pricing, also good luck.  I’m not trying to being pretentious or condescending.  This is just the reality.  Those agents are only going to get access only after the presales early phases have already sold out, and now the developer can switch over to Triple A financing and start their construction, and then they can just sit and wait for the other unit to sell… now at a much higher premium.

So what do you do?  Align yourself with an agent who has early access, and one who can get allocation, and one who can be your advocate, and one who can get you assignment rights, and one who can cap your development fees, and one who can help you select effective floorplans that minimize wasted space, and one who can help you identify your tenant profiles & projected rents & projected cashflow & projected returns.

This article has focused on the why.  The next article will focus on the how, including touching on HST, HST rebates (and the forms to use to get the rebate back), assignments, occupancy, owner occupied vs. rental, pros/cons,and exit strategies (i.e. what if can’t qualify for a mortgage after it’s built?)… and most importantly, how Preconstruction Condos help new investors get started as part of a broader investment strategy using the “Stepping Stone Approach”, and how to build up to eventually owning land in Downtown Toronto!

 

Meetup: Pre-construction Condos – Do they make sense as an investment?

We actually delivered a meetup presentation specifically for Preconstruction Condos in May 2018.  Details of it are available here.  Contact us for the slides/video/audio.
https://www.meetup.com/Volition/events/rcztmpyxhbwb/ 

 

About Us

The Volition Investment Properties team are experts in Toronto real estate.  We’ve helped investors invest in over $110M+ in real estate, build over $47M+ in wealth, and generate $4.5M+ in cashflow.  We’ve also educated over 650+ investors at our Monthly Real Estate Investment Mastermind meetup (www.meetup.com/Volition).  Contact us today for a free 60 minute complimentary consultation to see how we can help you reach your real estate goals, so that you too can “Live Life By Design, Not By Default”.

 

 

Capital Gains

Simply put, capital gains occur when a property is sold for more than what it was purchased for.  A property that was purchased for $1M and sold for $1.2M will have $200k capital gains.  Only 50% of the capital gains is subject to tax, meaning only $100k is taxable.  This amount will be added to the owner’s taxable income for that year.  For all intents and purposes, this generally means that almost the entire $100k will be taxed at the marginal tax rate, which we can generally estimate at 50%.

So if you were to sell a property and make $200k in capital gains, you should estimate to set aside $50k (25%) to pay in taxes at the beginning of the following calendar year (e.g. if sold in 2018, 2018 taxes are filed in April 2019, taxes to be paid around April 2019).

 

Reducing Capital Gains

Going deeper… capital gains are actually calculated using the Disposition Proceeds MINUS Adjusted Cost Base MINUS Outlays & Expenses.

  • Disposition Proceeds are the funds you received for your property from the sale.
  • Adjusted Cost Base would be the purchase price of the property.  Renovations costs can also be included, as well as any expenses to acquire it, such as legal fees, Land Transfer Tax, etc.
  • Outlays and Expenses:  Costs associated with the sale of the property.  Lawyer fees, Realtor fees, etc.

So it’s important to keep good records / bookkeeping because you are actually able to reduce your Capital Gains by deducting the relevant expenses.

 

Recapture

Claiming depreciation on the building is a GREAT thing from an operational perspective (i.e. straight line depreciation of 4% of the cost of the building over the course of 25 years… and you/your accountant can designate the building value vs. land value to whatever is appropriate… I recommend making the building value as high as possible).  It effectively brings down your operating income down to zero, in 99% of the cases, meaning that you SHOULD be paying income taxes due to rental income (this is a separate topic altogether).  BUT, upon sale, if you sell the property for MORE than what you paid for it, then the CRA will say “hey, you can’t depreciate it after all, since it went UP in value!”.  This means that you have to pay the tax deduction that you took on the depreciation of the building back to the CRA.  But that’s ok, because you effectively had a tax free loan from the CRA during the entire time.  And it helps with cashflow from an operations perspective.

 

Principle Residence

Your PR is NOT subject to capital gains.  NOTE: Starting in 2016/2017, the CRA requires that the sale of a principle residence to be reported on your tax return.

 

% of Use

If you lived in one unit of a multi, an accountant would probably recommend to designate your unit as a % of the entire property as Principle Residence.  For example, 1 unit out of 3 would be 33.3% principle residence, 66.6% rental property.  This is not an exact science… you may be able to argue your principle residence portion as a actual % sqft of the whole, or # of floors… so let’s say that you lived on 2nd and 3rd, then you may be able to say that you are designating 50% as primary residence.  This is going to be up to you and your accountant.

 

Change of Use

If a property was previously your primary residence, and then you moved out and then turned it into a rental property, then it’s deemed a Change of Use.  It would be capital gains exempt under Principle Residence for the duration that you lived there, and then it would be subject to capital gains for the duration that it is a rental property.

At that point, you are supposed to technically get a appraiser to appraiser its market value at that point in time.  However, this is usually overkill and a waste of money, and a “Letter of Opinion” from a reputable Realtor (i.e. us!) would usually suffice.  We would pull comps and be able to defend the market value.  You would want the market value to be as HIGH as possible, so that more of the capital gains would be Principle Residence exempt.

 

Dirty Little Secret Rule

Oh, and there’s a very obscure little known rule whereby if you change your Primary Residence into a rental property (“Property #1), and you move somewhere else (“Property #2”)… let’s say that you are RENTING the Property #2 (i.e. you become a tenant)… or if Property #2 is not as valuable of a property with limited upside potential… you can continue to designate Property #1 as your primary residence for up to another 4 years, even though it is actually a rental property.

http://realestatetaxtips.ca/the-little-known-4-year-extension-on-principal-residence-exemption-after-you-move-out/

 

About Us

The Volition Investment Properties team are experts in Toronto real estate.  We’ve helped investors invest in over $110M+ in real estate, build over $47M+ in wealth, and generate $4.5M+ in cashflow.  We’ve also educated over 650+ investors at our Monthly Real Estate Investment Mastermind meetup (www.meetup.com/Volition).  Contact us today for a free 60 minute complimentary consultation to see how we can help you reach your real estate goals, so that you too can “Live Life By Design, Not By Default”.

Toronto skyline

Why Invest In Toronto?

Toronto skyline

Why Invest In Toronto?

We get this question all the time! With prices high and competition fierce, why do investors still pour money in to the Toronto market? It doesn’t take skill to buy a property – if you’ve got the money, you can make a purchase; but what separates your average person from a sophisticated investor is being able to mitigate your investment risks.

 

What are the major risk factors?

1) Tenant Risk – the risk of having bad tenants
2) Market Risk – the exposure your invest has to market changes
3) Property Risk – the risk of the property itself
4) Investor Risk – the risk stemming from the lack of knowledge of the investor.


How is risk different in Ontario vs. the rest of Canada?

Ontario cities have a different risk profile compared to typical Canadian cities. A typical Canadian city has a balanced risk profile, with each major risk element being equally important. Therefore, your risk mitigation strategies would also be equally weighted. Ontario has laws which are much more favourable to tenants, making tenant risk much higher. If you have bad tenants in Ontario, it can take months and cost thousands before an eviction. This can impact your investments long-term sustainability.

So how does investing in Toronto help mitigate my risks?

Return is a direct function of risk and real estate is no exception. While investing in Toronto might come at a premium, your investments are less prone to the four major risk factors.

Tenant RiskWith tenants as your biggest risk to your investment portfolio, it’s key to invest in areas which attract the best tenants – not just “okay” tenants. Investing in the right areas in Toronto means you attract the best demographic – young, professional Millennials working in the downtown core. They are typically university educated; have stable well-paying jobs in Finance, Insurance, Consulting, Healthcare, and Tech; and earn salaries between $60k–$80k. This demographic is also willing to pay top dollar for great apartments, allowing you as an investor to maximize rent potential. Finally, this demographic is transient, which means they’ll move out after a few years. This is vitally important: due to rent control laws in Ontario, you’re only able to easily increase rent on tenant turnover. In contrast, investing in a small town can mean a more challenging tenant profile which means a larger risk to your investment portfolio. If you invest in the right areas in Toronto, you reduce your tenant risk and as a result, your investment is more easily held for the long term – which is where real wealth is generated.

Market Risk – Population growth drives real estate prices and jobs drive population growth. Toronto is the economic and job creation centre of Canada. Not only is Toronto the headquarters for many businesses, it’s spread across a diverse number of markets; there are no ties to a single industry. Toronto’s population boom is expected to continue given recent legislation. The Canadian government announced that we will be accepting one million immigrants over the next three years and approximately 50% of all new immigrants (roughly 150,000) settle in Toronto. This, in combination with domestic in-migration due to job growth in the professional services sectors, will contribute to continued demand in the Toronto market. Downtown Toronto’s strength in economic diversity and its attraction as a place to live and work was shown through its resilience during the market downturn in 2017. Additionally, Toronto’s strength is reflected in its rental vacancy rate, which at the time of writing, sits at 0.7%.

Property Risk – Problems can and will occur with the actual property itself (e.g. leaky faucets, blown furnaces, old roof, etc.). A cashflow positive property will help build your reserve fund to ensure that you can handle any unexpected expenses and hold for the long term.  Volition will help you identify the right investment property in the right areas of Toronto that will allow you to cashflow positive. The other way to mitigate property risk is by building the right team of professionals. A home inspection will provide you with insights into what you can expect with the major systems of the home in the next 5 years of ownership, which you can then budget for.  Renovations are an effective way to reduce property risk, as a well-renovated updated property has less propensity for things to go wrong. All Volition clients have access to our rolodex of dependable plumbers, electricians, and handymen, which helps make your business run like a well-oiled machine.

Investor Risk – “Risk comes from not knowing what you are doing.” – Warren Buffett. Reduce this Investor Risk by getting educated and networking. Attend one of our Volition monthly seminars – they’re a great place to become educated and develop a strong network of other investors. Ultimately, a sophisticated investor can turn an underperforming property in a  strong performing property, because they know which strategy to employ at any given time. Likewise, a sophisticated investor knows how to deal with any situation that arises, or has the network to lean on in the event that something is beyond their expertise. Treat your investments like a business.

 

I’m ready! How do I invest in Toronto?

The best way to invest in Toronto is by building a strong team. Volition is an award–winning investment firm and the Real Estate Investment Network (REIN) exclusive Investor Realtors in Toronto. We provide four areas of services for our clients:
1) Advisory – Guiding investors through the entire investment process
2) Realty – Finding and purchasing investment properties
3) Renovations – Build and renovate properties to maximize returns
4) Property Management – Help our clients hold for the long term

We help our clients live their life by design, not by default!

 

Contact us today for a FREE 60 minute consultation! We’ll review your investment goals and develop a plan on how to reach them. Email us at info@volitionprop.com to setup your appointment!

 

 

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