Understanding Short Term/Medium Term/Long Term investing
When making investment choices in the Toronto Condo Market, it helps to understand what kind of investor you are. We typically categorize investors in three categories which help define which kind of projects are best for you:
SHORT TERM INVESTOR:
Definition: Typically referred to as a “flipper” with the goal of selling as soon as possible. Investment time frame is typically 0-5 Years.
Best Type of Projects: Typically in already established neighbourhoods with clear history of appreciation.
Key Incentives: Assignment Clause (able to sell before closing), Capping of Development Levies (to ensure that the assignment buyer is protected), Low deposit structures
MEDIUM TERM INVESTOR:
Definition: Medium term investors buy pre-construction condominiums with the intention of closing on the unit and renting it out for 2-4 years before selling. We find approximately 90% of our investors consider themselves “medium term investors”. Typical time frame from initial investment is 5-10 years.
Best Type of Projects: Established neighbourhoods with history of appreciation and rental rates, up and coming neighbourhoods with master plans that offer significant growth within 10 years, locations with emerging key features that will be completed within 10 years that will enhance the value of the condominium (example: new transit line, new park etc.)
Key Incentives: Capping of Development Levies, Rental Guarantees
LONG TERM INVESTOR
Definition: Long term investors are building a portfolio of condominium suites as a form of wealth preservation. Long term investors will close on the unit and rent the suites with no definite timeframe to sell the units.
Best Type of Projects: Established neighbourhoods with history of appreciation and rental rates, up and coming neighbourhoods with master plans that offer significant growth within 10 years, locations with emerging key features that will be completed within 10 years that will enhance the value of the condominium (example: new transit line, new park etc.)
Key Incentives: Capping of Development Levies, Rental Guarantees
