Whether you are purchasing a property in Toronto or buying your first home, there are several key factors that many buyers overlook (which could be costly in the long run!). From parking issues to property boundaries, these details can have a significant impact on the home-buying process. In this article, we’ll dive deep into these often-overlooked aspects, ensuring you’re fully informed before making one of the biggest investments of your life.

1. Parking: What You See May Not Be What You Get

When browsing listings on the Multiple Listing Service (MLS), you might come across a property that states “parking.” However, it’s important to understand what that actually means.

• Mutual Driveways: A mutual driveway is shared between two homes, and parking may be agreed upon with a neighbor. However, this is not always a permanent arrangement. If the neighbor moves or decides to end the agreement, you could lose your parking spot. This type of parking isn’t legally guaranteed, so make sure to verify the terms before proceeding.
• Front Pad Parking: If the listing mentions a curb cut or a space in the front yard for parking, it’s not always a sure thing. To ensure that parking is legal, check if the address has a registered and active parking permit for that location. Front yard parking permits are tied to the property owner, not the house itself. If the previous owner hasn’t been maintaining the permit, you might find yourself unable to park there despite having a physical spot to park your car.

2. Check for Property Line Issues

Many buyers fall in love with a home’s spacious backyard, only to discover that part of it actually encroaches onto public space. It’s crucial to verify the exact property lines using a survey before making an offer. If a fence or structure has been built outside of the property’s boundaries, it could cause major headaches down the road. For example, if the backyard is being used for a pool or other large structures, the city might not allow construction if it’s on public land. Make sure to confirm with a licensed land surveyor.

3. Zoning and Restrictions: Know Before You Build

Before buying a property, especially if you plan to make improvements like adding a pool or building a deck, it’s essential to check local zoning laws and property restrictions. For example:
Environmental Concerns: Properties located near ravines or other protected areas may have restrictions on what you can build due to environmental preservation rules.

• Heritage Protection: Some properties, particularly those near archaeological sites, are subject to strict building codes, and you might not be able to build in certain areas of the property.

4. Local Developments: What’s Happening Around You?

New developments in the area can impact the value and enjoyment of your property. For example:

• Transit Lines and Construction: If a property is located near new transit lines or infrastructure projects like the Ontario Line, it could be subject to future construction noise, vibration, or limited access. Be sure to research upcoming developments and check with the city or relevant agencies to understand how they may affect your property.
• Train Tracks and Noise: Proximity to train tracks is another factor that many buyers overlook. While some properties may be near GO train lines, others might be close to freight lines, which run 24/7 and can produce significant noise and vibrations. Make sure to evaluate how much noise you’ll be dealing with before making a decision.

5. Noise and Vibration from Public Transportation

Many buyers don’t realize the extent of noise or vibrations they might experience when living near a subway line or major transit route. To get a real feel for the property, spend a little extra time at the house and test out the sound levels. Especially if the subway line is nearby. Over time, this could impact your living experience and even the long-term value of the property.

6. Verify Permits and Legal Structures

Before purchasing your property, it’s crucial to ensure that all structures on the property are legal and permitted. If you notice a deck, fence, or other structure that looks unusual compared to the surrounding properties, check to ensure that the necessary permits were pulled. Without proper permits, you could face legal challenges or fines if you ever need to make changes or plan on doing future renovations.

7. The Importance of Surveys and Property History

Surveys are essential tools that provide an accurate picture of the property boundaries, location of structures, and potential encroachments. Always ask for a recent survey of the property and take the time to verify the accuracy of the information. It’s also wise to investigate the property’s history to uncover any past issues that could affect your investment.

The key takeaway? Stay informed before you buy!

Buying a home is an exciting journey, but it’s important to do your homework before committing. As we highlighted in this article, parking arrangements and property boundaries to zoning laws and local developments can be a few factors that can affect your property’s value and your overall experience. By staying vigilant and seeking professional guidance, you can avoid these common pitfalls and ensure that you’re making a sound investment in Toronto’s competitive real estate market.

If you’re thinking about buying a property in Toronto, make sure to ask the right questions and research thoroughly. Your dream home might be closer than you think, but understanding the details will make all the difference. 

Need help buying your first property? Contact us! We’re here to give you an authentic real estate experience.

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Toronto Real Estate – Are Investment Properties Carrying Themselves In Today’s Market?

The Toronto real estate market has been known for its robust performance over the years, with property values experiencing steady appreciation regardless of their high and lows. Investment properties, particularly rental properties, have been popular among investors due to the potential for rental income and capital gains.

Whether investment properties carry themselves in the market depends on various factors, including property prices, rental demand, vacancy rates, interest rates, and economic conditions. During periods of strong price growth and high rental demand, investment properties may indeed generate enough rental income to cover mortgage payments, property taxes, condo fees, home insurance and other expenses. In such cases, the property is said to be “carrying itself” or “cash flow positive.” But when property prices surge faster than rental rates and interest rates follow the same trend because of government policy,  the possibility for a property to carry itself decreases to the point where cash flow becomes negative.

To determine the current state of the Toronto real estate market and whether investment properties are carrying themselves, we would need to analyze them from the Cash Flow perspective, and we are including 3 examples to consider.

This analysis is based on condominium suites purchased with 20% downpayment, a mortgage rate of 6% and amortization period for 30 years. All prices and fees related to the properties used for the analysis are an average of  sales and leases that took place in Downtown Toronto (Districts C01 and C08 – Waterfront Communities – that means South of Bloor St and between Liberty Village and the Don Valley Parkway), in the last 30 days. Keep in mind that every location and property can have a different dynamic, and averages are not necessarily indicative of the situation of your property or one you want to purchase.

When evaluating income properties, investors should consider both cash flow and potential equity gain as part of their overall investment strategy. A balanced approach that takes into account both your short-term cash flow needs and the long-term equity growth potential is often advisable.

For some investors, immediate cash flow is a priority, and they may seek properties with strong rental demand and positive cash flow from day one. On the other hand, other investors may be more focused on long-term appreciation potential and are willing to accept short-term negative cash flow if they believe the property’s value will increase significantly over time.

Ultimately, the decision to invest in income properties in Toronto should be based on a comprehensive analysis of the property’s financials, market conditions, personal investment goals, risk tolerance, and long-term financial strategy.

For a more accurate analysis and if you’d like more information about this, please contact us or message us on Instagram. We’ll be happy to answer your questions.

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Vacant Home Tax

As of January 1st, 2023 ALL residential property owners in Toronto will be required to declare the occupancy status of their property(ies) for the previous year. The goal of the City of Toronto is “increase the supply of housing by discouraging owners from leaving their residential properties unoccupied. Homeowners who choose to keep their properties vacant will be subject to this tax”.

When: The deadline is February 2, 2023

How: The online declaration portal is NOW open. Visit this link and click on the SUBMIT DECLARATION button.

Keep in mind that:

• A property is considered vacant if it has been unoccupied for more than six months during the previous calendar year or is otherwise deemed to be vacant under the bylaw.
• Revenues collected from the Vacant Home Tax will be allocated towards affordable housing initiatives.
• The Vacant Home Tax is 1% of the Current Value Assessment (CVA)
• The tax is based on the property’s occupancy status for the previous year. For example: for a home vacant in 2022, the tax will become payable in 2023.
• For more information about the VHT, visit this link.
• It is the responsibility of purchasers and vendors to make the appropriate arrangements to ensure that the declaration has been filed. When buying a property with a closing date happening before February 2 in any year (for now) you must make sure and confirm with your lawyer that the seller has already made this declaration BEFORE closing. Otherwise any unpaid taxes will become the purchaser’s responsibility.

Foreign Buyers Ban 

On June 23, 2022, Parliament passed the Prohibition on the purchase of residential property by non-Canadians Act which will come into force on January 1st, 2023. Based on interpretation of the Act the language suggests that the prohibition applies to agreements entered into after January 1, 2023. For the full version of the Act and its contents please visit the Justice Laws website in this link.

Don’t miss out on the real estate opportunities in 2023. Our team is here to help you navigate the Toronto real estate market and make informed decisions about buying or selling. Book a Discovery Call with us today to get expert insights on your specific needs and make the most of the coming year.

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1. Although another small increase in the interest rate might happen, the worst is behind us as the peak of the hike has passed. There are signs that show the system and Canada will be able to remain resilient while inflation comes under control.
2. Given the short-term shock caused by the increased borrowing costs, some property price adjustments might continue happening depending on the location, amount of inventory available in that location and the type of property. 
3. We expect to see an increase in the demand for ownership, most likely after the first half of 2023, as the dust settles and immigration numbers continue to rise, with most people coming to the GTA, many of which are looking to buy.
4. The pressure on the rental market will continue in our city. So far we have seen a double-digit rent increase due to the growth in the demand caused amongst other things by the reopening of colleges and universities, the [partial] return to working from the office, as well as the return of some of the people that had left the core. In the condo market, the competition for rental units has intensified and multiple offers will most likely remain common. It will be interesting to see the dynamic of the market when renters decide to buy instead if the cost of rent continues to rise to a level where paying for a mortgage makes more sense.

Taking one day at a time, adjusting to the changes and keeping the right information at hand will help us all go through this time.

Keep calm: You are building wealth through Real Estate.

It is no secret that owning real estate and especially your principal residence is an asset that most people hold on to dearly and believe in as a wealth creating tool. The old saying that “location, location, location” is the most important aspect of a purchase, gains more strength as the market cycle moves along its stages, and particularly when it hits bottom. So if you’re looking to buy your first home, move up to a bigger one, sell your current home to “right-size” or invest on a property that generates income, make sure you pay close attention to the location.  

As inflation traces its way and while it’s put under control, be mindful that your property is shielding you from the loss of value. For instance $100,000 put in the bank would currently earn you anywhere from 2.5%-3.5% annually, 2 years ago would have earned you much less than that and with our current inflation at 6.9%, it has already eroded any gains you obtained. On the other hand, if you bought 2 years ago, put as part of the downpayment  on a property, those $100,000, have already outperformed any other investment. 

A couple of examples (using the Home Price Index – HPI as reference of increase/decrease in value):

For a condo bought in November 2020

• Purchase price: $800,000
• Downpayment: $160,000
• HPI for condos since November 2020: 29.37% (varies per neighbourhood)
• Price in November 2022: $1,035,000
• $160,000 put into a condo 2 years ago has generated 147%. ($235,000)

For a detached home bought in November 2020

• Purchase price: $1,500,000
• Downpayment: $300,000
• HPI for detached homes in Toronto: 8.8%
• Price in November 2022: $1,635,000
• $300,000 put into a detached home 2 years ago have generated 45% ($135,000)

BUT, most likely you did not pay cash for any of these properties. Let’s say you put a 20% downpayment and if that is the case your $160,000 in the condo has generated a whooping 147% ($235,000) and your detached home 45% ($135,000). You are combining appreciation with leverage, so your property has appreciated but the amount of cash has returned much more.

It may sound like a very basic calculation, but deduct the amount of interest paid through your mortgage, and even basic maintenance during this same period, and your investment is still generating gains. For a more detailed calculation, feel free to reach out!

For those who bought as the market peaked, you are also ok. Prices will continue to move up in the following years – most likely at a slower pace compared to what we experienced during the pandemic – but the strong demand for housing in our city will continue to be constant and one that will not allow prices to go back to much lower levels than what we are seeing today. 

If you own income-generating properties that are carrying themselves through the rent, you are doing well, you don’t need to care what the market does, your property will continue to appreciate and for all scenarios, while prices can change over a period of time, real estate values have gone up, ALWAYS. Or ask your grandmother about the property she bought in Toronto back in 1970.

When looked at as a long-term investment, real estate has never let us down. The upward trend in prices will continue and appreciation is one of the best ways to create not just wealth, but generational wealth.

Ready to make your move in the real estate market? Get a head start on your plans for 2023 by booking a Discovery Call with our team. During the call, we’ll discuss your specific real estate needs and help you understand what to expect in the market over the next few years. Don’t miss out on this opportunity to get expert insights and make informed decisions about your real estate goals. Schedule your Discovery Call today! If you want to stay updated and get the best tips about Toronto real estate in 2023, follow us on social media!

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Here are some of the most common questions Castillo and Pardo are asked in today’s market.

1. Will the price adjustment continue?

“There are several forces affecting house prices: continued rising interest rates, low quality inventory and during the summer we saw people having to sell their current home because they’ve committed to purchase another, regardless of the price they got. Now we’re watching whether homeowners up for mortgage renewal must sell because of the higher interest rates. While more inventory will affect prices, keep in mind that some communities in Toronto are still four to six per cent above the prices that we had last year, and some even remain 30 – 40 per cent above.  Large price adjustments will depend on location, and the basic law of supply and demand.”

3. Is it a good time to buy an investment property?

“It depends on the type of property and purpose of your investment. Is it obtaining positive cash flow, earning equity, living in the property, renting it out? Understanding this and the future costs when disposing of it (land transfer tax, selling fees and capital gains) are key. Property prices in Toronto are not coming down as quickly as interest rates are coming up, so you could be almost doubling your cost for a mortgage. And while you could increase the amount of down payment, there might be a better way to invest that extra money.”

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