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The Annex- Should I invest in a multi unit home? - Toronto Real Estate Blog

August 26, 2010 - Updated: May 4, 2017

So you are thinking about becoming a Real Estate Investor and are actively searching for houses that are for sale in Toronto, but you have no idea where to begin or how to prospect potential income properties that are currently for sale in Toronto neighborhoods. As a Realtor who actively trades and invests in Toronto I can suggest you get on the bus as quick as you can! Investing in multi unit homes if done correctly will build a great residual income over time.

 

Multi unit dwellings that hold a minimum and a maximum of 4 units are my game. The type of neighborhoods that I look for when prospecting must have close access to great public transportation, limited supply of land, an increase in population, good schools, close to fantastic parks (such as for eg..High Park) and good public amenities. All these attributes listed above make the neighborhood desirable in the eyes of potential renters. One neighborhood of choice is The Annex; a small quite Toronto neighborhood that has all these key benefits.

 

Now why only 4 units and not 5 or 6 or even 7 per say? It’s simple, here is why, because any property that contains 4 units or less is considered a residential transaction in the eyes of the lender which in turn means lower interest rates and is much less complicated in obtaining the financing, also 4 units is the magic number that will yield the highest return on your initial investment.

 

What type of homes? And should I be prospecting properties with distinctive qualities? Yes you should! It is very important to scout specific types of dwellings that will yield the potential that as investors we seek. For example, 2 storeys, bungalows or one and a half storey homes ARE NOT what we want. You should scout a home that is a minimum 2 and a half storey or even a three storey dwelling, only because the potential space that it has to maximize 4 units.

 

Choosing an ideal investment property takes experience and skills. An ideal investment property is a property that is able to generate a ROI of at least 8% per annum; and at the same time provide a capital appreciation of at least 10% per annum. With the way the Toronto real estate market is shaping out to be, finding a property that yields a decent ROI is going to be tough. My prospective when analyzing an investment is much less conventional then following the standard formula. I dissect the cash flows versus the total yearly expenses plus research the vacancy rates in the local neighbourhood that I am scouting. My goal is to have positive cash flows after tax regardless of the amount at the end of the year and continue to borrow against the equity of the property to acquire others to add to my portfolio. This method as worked for me very well because real estate in my opinion is a long term investment and as long as I am not covering the total costs to carry, then the investment is ideal. The down payment is the true amount of dollars that it is costing me to acquire, and if the payback period on my initial investment is less than 5-7 years then I am golden.

 

And please note one other important reminder when searching for the right property, when choosing an investment property it is not about finding a place that has “the vibe” for you, it is a financial decision based on a number of key criteria. 

Search all Annex Real Estate Listings including properties for sale, for rent, commercial listings and all available condos!

 

If you want to learn more about this approach to investing in real estate please feel free to call me at 416 -769-1616

 

Please feel free to leave a comment and tell us your experiences when investing in multi unit homes.


Tagged with: investmenting in multi unit dwellings houses in toronto for sale annex houses for sale annex neighborhood the annex
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Comments (3)

Posted by: Mallorca Properties of www.mallorca-properties.co.uk
July 21, 2011 @ 10:16 am
Thanks for the wise critique. Me & my neighbour have been getting ready to perform a little research about that. We received a great guide on that matter from our local library and most books the place not as influensive as your information. I am very glad to see such info which I used to be searching for a protracted time.This made very glad! Anyway, in my language, there usually are not much good source like this.
Posted by: teak tree investments of Tonni00711@yahoo.com
July 1, 2011 @ 9:20 am
When most people think about investing in real estate, the first thing that comes to mind is their home. For many, their home is the single largest investment they will ever make. Once a home is purchased, it then becomes part of an overall portfolio of investments, others being mutual funds, stock and bonds. In fact, an individual's home is one of the most important parts of an investment portfolio because it serves a dual role as not only an investment but also a centerpiece to the individual's daily life.
Posted by: Tom
August 28, 2010 @ 1:41 pm
Good and informative article. The concept does work. I too have being applying some of those principals outlined here. The only thing I could add to it is that if you have an individual, perhaps a family member that is earning 2% in the bank, and you offer them 6 or 7%, for the actual down payment and closing costs, than it even works out better. Of course you need the right property and trust ( or register a 2nd mortgage on the property security for DP and closing costs ). You have to be careful when doing this. Make sure the property is right, crunch your numbers,etc, etc etc.

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Vincent La Fiura
Toronto Real Estate, Condos, Lofts, Townhouses, MLS Broker

Phone: 416-769-1616
Fax: 416-769-1524

 

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