A Window Into the World of Condo Investors

 

A PDF of the report can be accessed here

A summary of the study’s findings:

  • Rental investors represented roughly half of all new condo units that closed last year, two-thirds of whom used the MLS system to lease their units
  • 20% of condo investors that closed in 2017 purchased the property with no mortgage
  • The Big 5 banks provided three quarters of credit to investors. Private and individual lenders accounted for 5% in terms of dollar amount and close to 10% in terms of number of transactions
  • The average appreciation between pre-sale and final closing was 51% over an average of five years. The average return on investment (20% down) was 155%.
  • The majority of condo investors that took possession in 2017 with a mortgage had positive cash flow. However, 44% were in negative cash flow, of which 55% were negative by more than $500 a month
  • The share of total annual condo supply represented by investors with negative cash flow greater than $500 was only 3.4%
  • Foreign buyers represent less than 10% of investors. Most investors are between the ages of 40 and 60 with discretionary wealth, and many invest as part of their retirement savings strategy or as a plan to help their children get into the market
  • For units in the pipeline scheduled to complete construction in 2021, rents would likely need to rise by 28% (7% per year) from today in order to achieve neutral cash flow. This follows a 9% gain for rents in 2017 and a five-year average of 5%.

 

 

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