property

Deciding between a house or condo is never easy

Canada’s Toronto has been showing up on the radar as offering options on both

By Sabine Ghali, Special to Gulf News
12:53 January 6, 2016

House or condo? That’s the first big question for international property investors as they begin their search for Canadian real estate. The answer is not singular nor is it simple.

If you’re considering international property investment in the Greater Toronto Area (GTA), consider these factors when looking at property types.

* Houses

Investing in a house in the right neighbourhood is a great choice. It offers purchasers a lot of flexibility: You’ve got more space to accommodate families; a sense of privacy, which in a busy city so many crave; the potential for a backyard oasis; and the freedom to design and update the place any way you’d like.

Condominiums on the other hand give you a lot less space to work with and come with many rules about the type of renovations that can be done within. In recent years houses have been appreciating better than condos. If your investment property might one day become your home, a house can be a good income generator in the short term and a wonderful place to really set down roots in the future.

The downside to a house is its substantial cost as it’s more expensive to purchase and maintain. I recommend investors set aside around 1 per cent of the house value annually. This covers any major work, for instance a new roof, waterproofing, or furnace replacement.

You also need to budget utilities during untenanted periods. These can cost a pretty penny and will fluctuate dramatically with the seasons. Insurance is also more expensive for a rental home than condo; and in some jurisdictions, Toronto included, land transfer taxes are due when you buy the property.

* Condominiums

Convenience is the name of the game with a condo investment. This convenience can’t be overstated for property investors who live abroad. No worries about coordinating regular outdoor maintenance like snow removal and landscaping; major maintenance and emergency work is budgeted for, organised and managed by the condo corporation.

While you may pay a premium through monthly condo fees, you aren’t typically hit by unexpected charges. This convenience extends to would-be tenants. Many condos offer an impressive range of amenities like gyms, party spaces and pools that help foster a sense of community within the building itself.

And their typical urban setting means your tenants live in the heart of it all, with public transit at the door for jaunts further afield. Condo living attracts urban professionals and empty nesters alike, making your prospective tenant pool deep.

Investors also have lots of options given the number of developments that crowd urban centers. It won’t be hard to find the perfect sized unit, have choice of location and even be picky about the amenities the development offers. The same sort of choice isn’t available for houses, especially in the best neighbourhoods where demand is highest.

But with this convenience, you need to abide by the rules of the condo corporation that can encompass all sorts of things, including pet restrictions. This might be a deal breaker if one day you want to call the place home.

I always tell my clients to consider their lifestyle and goals when looking to invest in property. Is the property solely an investment or do you plan on moving in at some point? Houses are more expensive, but are a better proposition over the long term.

The average year-on-year house price increase in Toronto in November was 10.7 per cent, while the increase for condos was 4.1 per cent. Whatever you choose, never underestimate location as a key factor. Toronto neighbourhoods aren’t created equal so be sure to consider:

• Proximity to the city center: How easy is it to get there, if you’re some distance?

• Neighbourhood amenities: Can you walk to the grocery store, restaurants, public transit?

• Are there universities and hospitals in the area? These attract good renters.

• How are the neighbourhood’s schools? If you’re thinking of investing in a house that would likely attract a family as tenants, this is very important.

— The writer is Director of Buttonwood Property Management.