Cole said:
Is it just me or the pre-construction condo prices in toronto to high to make this possible? or am I looking at the investment from the wrong perspective?

Cole you're totally off base here. Don't think of the money you'd have to put into the condo every month, or the many other investments (even in real estate) that would produce a very positive monthly cash flow. It's all about cap gains in Toronto where real estate only goes up. Assuming a conservative 10% annual increase, your $400,000 investment will be worth $1.6million in only 14 years!
(Sarcasm off) Cole, trust your gut instinct on this one. The numbers don't lie. Buying a cash-flow negative condo in Toronto at this point in time is a terrible investment.

Hi Cole,
No offence but I think you ARE looking at it completely from the wrong perspective but let me tell you why. The investors that I work with are in the pre-construction game BECAUSE of the capital gains. They couldn't care less about cash flow because their intention is not to rent out and be a landlord in the first place. Landlording is only a backup option to their original plans, which is to sell the property while it's hot and walk away with a large sum of cash. Some might call it speculating but I just call it winning and smart investing. The reality is you are not going to get cash flow generating condos in Toronto unless you are putting a serious amount of money down like 30%+. If you really want a cash flow generating property, go buy a house in Hamilton, fix it up, deal with tenants and rent it out and get like $300/month cash flow but I can guarantee you will not be getting the type of capital gains you see in Toronto because the demand is so much higher in Toronto. Let me show you what I mean with some real life examples of what I have accomplished with my clients in the past.
1) $50,000 (deposit to builder) invested in a small DT 1BR near University/Adelaide. Profit was $88,000 by assignment which represents a 176% return on invested dollar. Purchased in 2007 and sold in 2011.
2) $125,000 (deposit to builder) invested in a 2 BR at Yonge/Bloor. $250,000 profit which represents a 200% return on invested capital. Purchased in 2008 and sold in 2012.
3) $100,000 (deposit to builder) invested in a 2+Den at Yonge/Sheppard. $91,000 profit which represents a 91% return on invested capital. Purchased in 2008 and sold in 2011. I felt like he bought this one too expensive in the beginning but it still paid off.
These are pretty staggering numbers any way you look at it, especially when you don't need to lift a finger except to tell the lawyer which bank account to direct the money. Take it from me I am in the field working and seeing these types of numbers every single day and you can do the same thing too (maybe not these exact figures because nobody can guarantee you an ROI figure). Some would argue that those days are over but in today's market, you just have to be smart with your capital and strategic in your decisions and you may get a pleasant surprise 3-4 years down the road. I don't know of any better "off-hands" investments than precon condos in Toronto. If you do, please feel free to share as I would love to know!
Truthfully, there must be a reason why there are so many investors flocking to condos because it is so lucrative and so easy. Investors in this city have been making absurd amounts of money doing this and I can certainly attest to that. I can help you achieve similar results if you want so let me know which projects interest you and I can give you my honest opinion/feedback about those and any other condo projects. I always have Platinum VVIP or VIP entrances into the hottest new projects in the city and good relationships with builders so let me see how I can help you achieve your financial goals!

Ben, phew, was about to reach through the screen and slap you. Thought you were serious ;)
Pryde, you should be careful when presenting these numbers to clients. The pre construction market is not the same as it was back in 2008. While some per-con buyers realized phenomenal returns during the sweet spot in the precon marke,t achieving those numbers are not realistic going forward.
Cole- if you're interested in buying pre construction it's important to understand that you may not see a massive return should you decide to flip prior to registration but I assume you understand that since your question referred to renting. The buy and hold strategy is a smart one in real estate. Many more long term benefits vs. potential short term cash gain. With the price per square foot increasing with every project the break even point on renting is getting tougher to achieve. With single unit rentals, break even is the goal, rarely are you cash positive. With 30% down you should be breaking even. Maybe even with 25% down.
Will be interesting to see how these new developments with ppsf upwards of $800 will perform. Some decent buys are still available though. Also Important to note that market rents will likely increase as demand for quality apartments increase. Consider short term rentals or furnished rentals to maximize monthly returns.
Happy Monday.

Thanks for the feedback.
My concern is this, I know investing in toronto is different from investing in a single family home in Hamilton. Banking on appreciation gains, only works if the market just infinitely goes up. Over the long term, yes it will but how do i hold a property to ride out the bad times? If I have already purchased so high, its hard for me to justify a significant rent increase in the future that will end up covering at a minimum my expenses.

The serious investors have direct relationships with the builders, and are able to get into the project in the "friends and family" selling period, where there are large discounts. It is with these discounts that the units can be cash flow positive.
If working with a "real" Platinum Agent, they are also able to get close to the same savings as mentioned above.

Hi Marco, just a quick comment. Having worked directly for a developer for nearly three years with my previous employer I've seen the development progress from idea to ground breaking and I can tell you that the discount offered to the ground floor investor is not substantial enough to make a huge difference. ground floor investors at best have a 2-5% price advantage over the guy who walks into a sales centre to buy. The main advantage to early ground floor access is the selection of investor friendly suites. The sub 500sqft ones that offer the highest rent per square foot. Rarely are investors cash flow positive on condos.
Back to Cole's question on how to ride out the bad times. Not quite sure what you mean in terms of holding a rental. Sure a down market will impact market value of the unit but unless you intend to sell, it's not an issue. If you're working with a variable mortgage and the interest rates increase thus putting you in negative territory that's a different story all together. As an investor you should be prepared for vacancy, emergency repairs etc.. I'm sure most investors don't do this but establishing a sufficient reserve fund to help you "ride out" vacancy periods would be prudent.
But if you've simply made a bad investment and the market rent simply isn't sufficient to cover your costs regardless of the market, well that's part of the risk in any investment. some win, some lose. Like I mentioned before, to increase the income consider furnishing the suite for short term corporate rentals. Perhaps harder to find a tenant but once you find a steady stream this strategy has proven to be quite profitable.