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.