Believe it or not, that’s a question I have NEVER been asked!
But in conversations with a blog reader this week, who emailed me some MLS listings and asked, “Are these prices too good to be true?” I think I might have found the cheapest condos in Toronto.
How about a 3-bedroom unit, over 1,000 square feet, for $124,900?
How much would you expect to pay for 1,000 square feet?
Let’s say it’s downtown Toronto, just for argument’s sake. Name your price.
Last week, my office manager came down to chat with a few of us who happened to be there, and he said, “I want to get a ballpark range of the cost for certain condo properties: a 1-bedroom to lease, a 2-bedroom to lease, a 1-bedroom to buy, a 2-bedroom to buy, etc.”
The group of us, not willing to do anything easily, immediately gave him a slew of qualifiers.
“Well does the 1-bedroom have parking? If so, it’s averaging $1700-$1800. With no parking, maybe $1550-$1600.”
“Are we talking new, or old? Loft of apartment?”
He sighed, and said, “I don’t know why I thought this would be easy….”
My point is that most Realtors could ballpark a condo listing within a hair or two. I asked my colleague today, “Hey Jen – what’s a 2-bed, 2-bath with parking at 313 Richmond gonna rent for?” She said $2,200’ish, which was exactly the number I had in my head.
So my point to this exercise?
I want you to ballpark 1,000 square feet in downtown Toronto.
I know, I know – there are qualifiers. But on average, what’s the range?
With 1,000 square feet, you’re likely into a 2-bed, 2-bath situation, which means you probably have parking. So what’s the average?
I’d say that’s fair. You could probably find a deal for an older, unrenovated unit in the mid-$400’s, and you could always shoot yourself in the head and/or pay $900K for a unit at Festival Tower, but for the most part, I’d say 1,000 square feet is going to average $550,000.
Of course, once you get outside the downtown core, things can change!
Sure, there are more expensive buildings; maybe up at Avenue Road & St. Clair, for example.
But then you have some must-see-to-believe condos that just defy all logic.
I guess I ruined the surprise with my lead-in to this blog post, but if you’re reading this, it’s because you wanted to know more!
A reader emailed me last week about a condominium at 5580 Sheppard Avenue, which is at Markham Road, just north of the 401, and asked “What’s the catch?”
Why are there condos for prices that look like typos?
I actually LOL’d, and yes, I’m using that term, when I read his comment: “The outside of the building looks like a correctional facility.”
You be the judge:
Wow, all that’s missing is the barbed-wire fence, the “yard,” and guys in orange jumpsuits stabbing each other with sharpened toothbrushes…
So I began searching on MLS, and guess what I found?
1-bedroom condos starting at $99,000.
2-bedroom condos starting at $114,900.
3-bedroom condos starting at $124,900.
And how about a 4-bedroom, 2-bathroom condo for $149,900?
It’s unthinkable, isn’t it?
Now, I know what you’re going to say: “This is Scarborough, this isn’t downtown Toronto!”
True. But let’s worth within the GTA, shall we?
I mean, isn’t there a subway stop right outside? Oh, wait…….city council, TTC, Metrolinx, Bobby Ford, Stevie Harper, Karen Whatsherface and the gang are still working that out, right?
In any event, this building is walking distance to Centennial College, and about 1.5 KM from Scarborough City Centre.
And you can have 1,000 square feet for $124,900.
Let’s do the math, for a moment…
Assuming you put down 20%, which in this case is a whopping $24,980, your monthly payment for a 5-year, fixed-rate mortgage on a 30-year amortization at 3.49% would be a paltry $446.73.
What are you paying each month now for your 2-bedroom in King West? $2,800?
The folks over in the Scarborough Penitentiary, er, um, 5580 Sheppard – they’re laughing all the way to the bank! Yes, then they probably get beat up in the shower, lose the fight for the top bunk, and get thrown in solitary confinement…….or maybe I’ve been watching too much Oz……..
I began to wonder how the numbers would work on this property as an investment, so I dug a little further.
2-bedroom units seem to pull in around $1,200 per month, which is good rent for two students attending Centennial, and great rent for a landlord looking for cash flow!
The 2-bedroom units in this building have sold as low as $80,000 for unrenovated…
….and they’ve been listed as high as the unit at $124,900 that I quoted at the onset of this piece, but for argument’s sake, let’s say you picked one up for a cool $100,000 – not an unreasonable number, given the sales over the last 12 months.
Here’s a breakdown of your monthly costs, assuming a $20,000 (20%) down payment, and same mortgage terms as above:
Mortgage – $357.67
Maintenance – $581
Taxes – $90
All in, you’re paying out $1,028.67 per month, and bringing in $1,200.
That $171.33 per month might not sound like a lot, but it’s 10.3% of your down payment on the unit!
Now add in the $2,748 that you paid in principal over the first year, and suddenly you’re making a 24% return on investment.
Those aren’t bad numbers, are they?
So what’s the catch?
Well, I guess the catch is that you have to own a unit in Scarborough, or that’s what a cynic would say.
But if you’re somebody that works in Scarborough, then you could be living in 1,000 square feet for $1,000 per month.
And if you’re an investor looking for cash flow, and a property that’s bound to attract interest from students, then there’s a nice return on the table.
The true drawback here is that this property probably won’t appreciate at the same rate as that of a downtown Toronto condo, and in a soft market, they might be hard to resell.
But I swear, it’s been a long, long time since I’ve seen a condo, anywhere, sell for $80,000….