Cashflow Chart - How much rent covers all my costs?
How much rent is required to generate positive cashflow?
One of the most important things in condo investment is whether the unit is priced to create a positive cashflow. Also the most popular investment units are 1B or 1B+D around 500-650 sqft.
So I've created a table for a quick reference to figure out
How much rental income is required to cover all monthly costs?
Let's look at a unit that's 560sqft, with mortgage interest rate of 3%, 30yrs amortization.
(Red box is the going price of 1B in Toronto)
Downtown Toronto's going rate for a 1B unit is $1000-$1400psf at the moment.
That means the units should generate monthly rental income of $2500-$3500 per month to cover all costs and generate positive cashflow.
It is difficult to imagine renting out a 1B unit at $2,500-3000 at the moment,
however in 2013, when the average condo price was around $600-800psf, nobody expected to rent out a 1B unit at $2000 per month in 2018.
I searched on condos.ca to see what the average rental prices are in 2018 and it confirms minimum $2000 per month. See below.
1B, 450-650sqft, downtown.
I hope this chart and analysis provides you value.
I am all about providing my clients with all the information about investing in condo's to make the most informed rational investment decision possible.