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June 1, 2023 | Negative-Carry Rentals Typical in the GTA

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

In 2020, Greater Toronto Area condo investors who bought a unit with a mortgage cleared $63 a month in net rent, on average (before any needed repairs). In 2022, they lost $223. Fourteen percent of condo owners lost $1,000 or more monthly (CIBC report).

Parsing the numbers further, in 2022, more than 80% of resale condos bought and rented out were cash-flow negative, with investors losing an average of $537 a month. Fifty-two percent of those who bought and rented out newly built condos with a mortgage in 2022 lost money every month.

But hope springs eternal: ‘Experts’ say that they “expect accrued equity and capital gains to overwhelm negative short-term cash flow.”

According to the CIBC report, on the other hand: investors’ losses will get worse in the next few years as more condos sold at peak prices in 2021, and 2022 are completed and put on the market. Rising properties for sale and rent should continue to exert downward pressure on prices.

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June 1st, 2023

Posted In: Juggling Dynamite

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