September 2019
Purchasing and leasing out condo suites does not appear to a profitable endeavour.
Newly purchased condos leased in Q2 2017 earned a median return of 2.5 percent according to a study by StreetEasy. The level remains unchanged since 2016 and is the lowest since 2010. This return is comparable to GICs which earn less than the rate of inflation. The study doesn’t account for mortgage and closing costs which add to the costs of ownership. It also does not consider price appreciation and the future sale of a condo unit.
The above comes from a study using New York City data. Like Toronto, New York City has undergone a construction boom and a perceived strength of real estate which has attracted investors.
Increasingly, buying and leasing out a condo appears less attractive. Higher sales prices have not compensated for the cost of owning and leasing. These costs include condo fees, property taxes, repairs and the cost of obtaining tenants.
