There are several reasons why lofts make for great investments. Whether you are an investor or looking for your next home or a first time buyer, this article will give you a quick overview of why lofts are appealing from an investment perspective.
The following are what most real estate investors research before making a purchase — and how lofts fit into the mold.
3. Maintenance Costs
It’s simple. Investors purchase a property, find a tenant to cover the mortgage and maintenance fees and then wait.
This is where most people ask, “Well, just how long do they wait? It can take 25 – 35 years to pay off a mortgage.”This is exactly why location is critical… and why successful investors only purchase in locations that are undergoing significant “gentrification.”
Up and coming locations are often located in what’s referred to as a “Ripple Effect Zone”. These are areas that are appreciating substantially as a result of their being positioned within a close proximity to an already well established –and expensive – part of the city.
Lofts play into this (especially true factory/warehouse conversions) because there happen to be many of them in these “up and coming” areas, such as: Corktown and Leslieville going east and Roncesvalles and Parkdale going west.
If a loft is purchased for $600 per square foot in an area that has yet to blossom, it may be worth up to $800 per square foot in a few years as Toronto continues to expand and populate.
Currently, the average cost per square foot of a loft within the city core ranges from $700 – $950, depending on the floor level, view, finishes and of course location.
Lofts are already in low supplyand high demand, compared to their standard condo counterparts. If you’ve taken a walk around Toronto lately, you’ve probably noticed that there are new condos popping up everywhere. This will never be the case for lofts, as there is a finite number of factories and warehouses that can be converted into true, “hard lofts”.
As more and more condo developments are built, they will continue to outweigh the number of hard lofts, limiting supply even further and creating more demand. For every completed condo development, the novelty factor for lofts increases – making them more desirable.
Lofts generally have lower maintenance fees as a result of the smaller building sizes and the lack of facilities. Just like we pay taxes for roads, health care, public education etc, condos with 24 hour security/concierge, swimming pools, gyms and billiard/party rooms have higher maintenance fees. There are certainly exceptions though.
Some people would certainly prefer to pay more for these perks, however from a strictly financial perspective, they don’t make for great investments.
Case in point: Lofts make for better investments than most condos.
We hope you’ve found this article to be informative! For more information about investing in Toronto real estate and/or Lofts, Contact us.