Condo vs House: What’s Better For Investors

Real estate has long been a good investment, especially in major metropolitan areas like Greater Toronto. As Canada’s economic and cultural epicentre, the demand for rental properties in the GTA continues to climb year after year. For investors, this means a whole world of opportunity.

If you’re buying an income-generating property, you have a number of options to choose from. However, it’s important to consider which type of investment will suit you best before you venture into the market.

In this blog, we’ll compare the advantages and disadvantages of condos versus houses as an investment.

Not sure if you’re ready to invest in real estate? Discover the advantages of buying an income property in Canada.

Should I Buy a Condo or a House?

Just like buying a property that you would call home, finding the right place to invest starts by considering your personal circumstances and goals.

For example, have you owned an investment property before? What is your experience with property management? Do you have other mortgages that you’re currently paying off? How hands on do you want to be with your property? These are all helpful questions to mull over before you start shopping for properties.

Here’s a pro tip: If you’re looking for personalized advice on which types of properties may best match your portfolio, get in touch with a real estate agent – ideally one who specializes in assisting investors. More on this later.

Want more advice on investing in real estate? Check out these other helpful posts from our blog. 

• 5 Common Myths About Real Estate Investment
• An Investor’s Guide to Pre-Construction Condos
• Why Vaughan is Better Than Toronto For Real Estate Investing

Are Condos a Good Investment?

Let’s start with condos, which offer a lot of perks for investors. Condos are generally a smart investment opportunity for a few reasons.

Upfront Affordability

First, condos are typically more affordable than houses. This means a smaller down payment and lower monthly mortgage costs.

Low Hassle Management

Condos are also fairly easy to manage as a landlord. Since they are smaller in size, you typically only have one to three tenants living in a single condo unit. This makes tenant sourcing, vetting, and communication easier.

Forget About Maintenance 

On top of that, condos require very little in the way of maintenance, especially compared to houses. You won’t need to worry about cleaning common areas, shovelling walkways and driveways, taking out garbage bins, landscaping, and other similar tasks. While you may need to assist with in-unit maintenance or repairs from time to time, these responsibilities will be few and far between.

Is Buying a House a Good Investment?

Just like condos, detached houses can make a great investment property. However, these upsides come with special considerations.

Upsize Your Income

Operating a rental property in a house typically comes with a much larger income potential compared to condos. This boils down to simple economics. Houses are larger, meaning they can fit more tenants and, in turn, bring in more income. Plus, certain house-unique features like yard space, garages, or patios can make the property more desirable in the eyes of renters.

Take Control of Your Investment

Owning a house also means you’re able to modify the property however you want (as long as you do so legally). For example, you could convert a traditional house into an efficient multi-unit property to attract and host even more tenants.

Long Term Gains

Another very compelling advantage of investing in a house is the resale potential. While your short term focus is to find tenants and earn income, it’s important to consider the long term implications of your investment as well.

In terms of market value, houses tend to appreciate very well – especially compared to the average condo appreciation rate. This means that in addition to earning passive income, you’ll also be building a strong reserve of equity as the years go by. On top of this, houses are typically “easier” to sell than condos, which can make a major difference depending on market conditions at the time of your sale.

Buying a house soon? Check out these related posts next! 

• How To Buy A Home
• Do You Need to Include Conditions in Your Buying Offer?
• What Are the Costs of Buying a Home in Greater Toronto?

Condo Fees vs House Expenses

Are condos cheaper than houses when it comes to upfront costs? On average, yes. But it’s important to think about recurring expenses too. When you buy a condo, you won’t just be paying off your mortgage every month. You’ll also be on the hook for condo fees, which are typically several hundred dollars a month.

Although the income generated from renting out your condo will help offset these costs, it’s essential to consider the impact they will have on your bottom line.

Find the Right Investment Property For You

No matter what you’re looking to accomplish as an investor, you won’t want to navigate the market alone. That’s where we come in, the Lino Arci Team. As Vaughan’s top real estate team (and investors ourselves), we’re well-versed in the nuances of investment properties and can help you identify the right opportunities for you.

Ready to begin your investment journey? We can help you build wealth through real estate. Call our team at 416-571-2724 or email info@arciteam.com to get started.