Turn on the news or open any news website in Canada, and you’ll quickly discover how hot the current real estate market is all over the country. Houses are selling quickly at prices that were once unthinkable.
If you’re an investment-minded person, you almost cannot go wrong with buying real estate in Peterborough. As prices in the GTA soar, many people are seeking to relocate, from single professionals and young families to retirees and empty-nesters. Towns and cities just outside of Toronto are seeing unprecedented growth, but nowhere compares to Peterborough. A high quality of life combined with relative affordability and close proximity to the GTA are attracting many newcomers. And with the lowest vacancy rate of any city over 10,000 people (as of 2022), you couldn’t ask for a better place than Peterborough to invest in! Let’s take a look at the types of housing you’ll find here, and what might be the best fit for your next venture.
Condos and Townhouses
Condos and townhouses are a great opportunity to get your foot in the door as a first-time investor. With a lower barrier to entry, you need less money for a down payment. In addition, your monthly carrying costs are lower, which can help you if you have a few months to cover between tenants.
What if you’re a seasoned investor looking to add to your ever-growing portfolio? Condos and townhouses are still perfect as their lower cost allows you to hold multiple properties. If one becomes vacant, your other units can still generate income.
Your options for condos in Peterborough range from small and functional to swanky and spacious – and everywhere in between! There is something for every investor to suit every budget.
Location is everything when investing in real estate. The resources below can help you find a spot that tenants will love:
- 6 Peterborough County Towns You Have to Know About
- Peterborough vs. Other Small Cities in Ontario
- Living In Toronto Vs Peterborough: What’s Better?
Semis and Detached Houses
A condo or townhouse might be a more accessible investment, but many investors prefer larger properties such as semi-detached and single-family dwellings. Yes, you need more capital and risk tolerance for this type of venture. However, the potential for reward is also far greater. With many families on the hunt for more living space, a semi-detached or family home can command far more in monthly income than a small condo or townhouse. In addition, they are often looking for long-term stability, which means less time searching for the right tenant while enjoying a steady stream of passive income. Best of all, your equity can grow faster as family homes tend to appreciate in value substantially over time.
Average Price vs Projected Income
Talking about the financials might put the average layperson to sleep. But for a savvy investor, knowing your costs versus potential income lets you know whether the property you have your eye on is a winner. As a result, this financial analysis can be one of the most exciting aspects of your journey! Whatever type of structure you plan on buying, these calculations will help ensure your investment is viable:
Down payment: In Canada, you need 20% upfront when buying an income property unless it will also be your primary residence. With the average house price in Peterborough currently sitting just over $700,000, this means you should have at least $140,000 available.
Closing costs: There are several hidden costs to be aware of above and beyond the listing price. For example, you’ll have lawyer’s fees, land transfer taxes, and title insurance to take care of. Ideally, you can expect to add between 3% to 5% to your purchase price.
Maintenance: If the house needs work before you can rent it out, you will have to factor in the costs of labour and materials. It is also a good idea to cushion this budget in case things don’t go exactly as planned.
Potential revenue: How much rent are other property owners charging for homes similar to yours? Is it enough to cover your carrying costs each month?
Long-term equity gains: The housing market can be volatile in the short term, with fluctuating prices making it difficult for investors to turn a quick profit. However, real estate values generally increase over time. The longer you hold onto your investment, the more equity you will build.
Looking for even more resources to make your real estate investment a success? The posts below will get you off to a great start:
- How to Spot the Perfect Real Estate Investment
- Should You Own Multiple Income Properties in Peterborough?
- What to Know Before Buying Vacant Land in Ontario
Pre-Construction or Resale?
Once you’ve narrowed it down to what structure you want to invest in, you’re well on your way to a secure financial future! But now there’s another decision to make. Should you buy a pre-construction home or a resale property?
A resale home already exists, likely has someone living in it, and the owners are ready to move on. However, the demand for housing in Peterborough is growing constantly, and developers are busy trying to keep up! This means there is a lot of pre-construction in the works in various states of planning.
When buying a resale home, here are a few great benefits to consider:
- It may need some work to bring it up to your standards, but a resale home is not necessarily “old.” It simply means someone has owned and lived there before, and it could actually be almost brand new!
- Buying a resale home is faster, meaning you have the potential to earn income sooner.
- Existing homes often have more character and mature landscaping, which can be very appealing to prospective tenants.
Resale homes are a fantastic investment, no matter how seasoned you are. However, there are still challenges you will face along the way. First of all, the current housing market is fiercely competitive and becoming even more so as time goes on. You may find yourself up against other investors and end users who are all interested in the same listing. Bidding wars often follow, and you will need to be able to emotionally distance yourself and walk away if the numbers are no longer feasible.
When buying a pre-construction home, here are a few things to consider:
- The price is the price based on what the developer sets. You don’t have to worry about bidding wars artificially inflating the value.
- You need less cash upfront to purchase a pre-construction project as the down payment is usually paid in several installments.
- Units often sell out quickly on a first-come, first-served basis.
- You may wait several years before the home is ready to live in and you can start collecting income.
The upside of pre-construction is obvious. The end result is a brand-new home that is absolutely pristine and untouched, and you’ll have a vast pool of tenants who want to be the first to live there. And if something changes between now and when your unit is finished, you have the option of selling your assignment. This process can be complex, but your friendly, local real estate agent can help guide you toward a successful investment.
Are you ready to start your adventure as a real estate investor in Peterborough? We are happy to show you the lay of the land. Reach out to team@jeffandkatie.ca or call 705-243-9797 for more information.
