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The case against condo investments – and FOR laneway houses

As this Toronto Star article says today, condo investors might find themselves $1,500 in the red each month trying to make their condominium investment work. That’s a long way away from positive cashflow.

But if you read our EXAMPLE HERE, you’ll see how laneway houses can be absolutely cash-flow positive each month.

Here’s the Star article today:

Condo prices are set to put many investors in the red as rents fail to meet carrying costs, experts warn – Toronto Star

There’s no shortage of people lining up to invest in the city’s burgeoning condo market — many of them mom and pop investors who see rental units as a hedge for their children against the increasingly unaffordable property market. Others are self-employed individuals without a pension who view a condo as an appreciating asset to help fund their retirement.

But real estate experts are warning that the investment scene will shift in less than five years as the cost of condos continues to climb at the same time Toronto tenants show signs of hitting a wall when it comes to paying for an apartment.

That will have significant cash flow implications for property investors because rent won’t cover the monthly carrying cost of those units, said Shaun Hildebrand, president of market research firm Urbanation.

“I’m not sure that condo investors that have been active recently in buying pre-construction units fully appreciate how much supply is underway in the condo sector and what that will do for their assumptions for returns,” he said.

MORE at the Toronto Star