When you are looking for a real estate property to buy or rent in Toronto, price is not the only fundamental factor that you consider. When doing your real estate property search, there are other factors that you put into consideration and one of them is the type of property to buy. You will need to make a clear decision about whether you would prefer to buy either a condominium, a single-family house, a multi-family townhouse, or an apartment.
There are several factors that should inform the basis on which you make a decision to go for a particular type of property and not the others. The decision about the choice of property type for most homebuyers is informed by what they can afford, their lifestyle needs, and the extent of owner/renter involvement in property maintenance.
Whether you are a first-time homebuyer or you are planning to downsize, we have prepared this extensive guide on the different types of real estate properties that you can buy or rent to meet your lifestyle needs.
Here is a brief breakdown of the differences between these 4 types of real estate properties;
Cost– They require a down payment, monthly mortgage payment as well as HOA fees
Ownership– Buyers own a unit of the entire building
Best for– First-time homebuyers or homeowners who want to downsize
b) House (single-family)
Cost- It requires a down payment, monthly mortgage payments, and property maintenance expenses
Ownership- The buyer owns the house structure together with the land/plot where the property sits.
Best for- Families and couples
Cost- Requires down payment, monthly mortgage payment, and HOA fees
Ownership- The unit and the plot where the property sits on
Best for- Bigger families looking for more space but they don’t want to take a majority of home maintenance roles
Cost- They require a security deposit and monthly rent
Ownership- They don’t attract ownership as they are primarily for renters
Best for- Renters who want more flexibility and those who are downsizing to save for a down payment
A condominium or condo refers to a salable unit in a high-rise building within a bigger community. If you are a homebuyer or renter who wants minimal home maintenance, a condo can be a great option. They are ideal for first-time homebuyers, singles, or individuals who are busy traveling frequently.
Condos share some similarities with apartments in the sense that they share common walls with other units. However, you buy a condo while you rent an apartment. Instead of buying a fully constructed condo, one can get a good deal by buying a pre-construction condo in Toronto.
Preconstruction condos have gained popularity among many investors as they have one of the best deposit structures. Most of them require buyers to put down only 20% of the condo value which is split into 4 equal payment phases of 5%. Currently, it’s a good time to buy pre-construction in Toronto as they are appreciating at an average rate of 6% per annum.
The real estate market in Toronto is stable and investing in pre-construction condos can be a great investment for investors interested in long-term passive income due to the high rental rate. Also, for homeowners who want less home maintenance, buying a pre-construction condo can be a great real estate property choice. Condo owners pay for HOA fees and that’s what condo associations will use for maintenance costs.
Different condo associations have different rules in regards to the types of customization that a condo owner can do and whether one can rent out the unit or not. Condos are not the best choice for homeowners who value too much privacy as they have common areas where neighbors share amenities.
Pros of buying condos
- Owners are less involved in regular maintenance
- Controlled single entry and exit points guarantee more security
Cons of buying condos
- Recurring HOA monthly fees
- Shared common amenities translate to less privacy
A single-family house is a detached real estate property that has its distinct foundation and structure. They don’t share walls or key amenities as it’s the case with condos, apartments, and townhouses. If you are a person who values privacy and loves customization, going for a single-family home is the best option that can work for you.
Single-family homes are excellent in terms of space although this comfort attracts a higher price tag compared to other types of properties like condos. Owning a single-family home comes with more home maintenance responsibilities such as lawn care and frequent repairs compared to other property types.
Pros of single-family homes
- Owners enjoy more freedom when it comes to customization choices
- They offer a better lifestyle and privacy as they are more spacious both indoors and outdoors
Cons of single-family homes
- They command a higher price tag
- They are more demanding as they require frequent maintenance and repairs
Townhouses are a bit affordable compared to single-family homes. If you don’t mind a house with lesser space (both interiors and exteriors) and a shared external wall, then a townhouse can work for you. Townhouses attract HOA fees and are subject to specific home association rules. However, townhouses offer more privacy privileges compared to condos as there are fewer amenities shared.
Townhouses offer more space compared to condos and have fewer outdoor maintenance demands than single-family houses. In terms of the maintenance cost, the older the townhouse, the higher the maintenance costs since common amenities will require frequent repairs compared to modern ones.
Pros of townhouses
- They are fairly priced thus, they are within reach for most homebuyers
- They offer more living space and flexibility
Cons of townhouses
- Shared amenities and exterior walls translate to less privacy
- They attract HOA monthly fees
An apartment refers to any dwelling that is inside a residential building where units are rented out but not sold. Some condos are specifically for renting especially in bigger cities. Most pre-construction condo projects in Toronto allow investors to buy units and have the option of renting them out in the future to generate passive income.
Apartments are designed with shared amenities for renters such as swimming pools, parking lots, gym, concierge, and meeting rooms. Affordability is one of the factors that one needs to consider when choosing between an apartment for rent or buying a condo unit.
If you decide to buy a condo, you must be ready to raise a down payment, on the other hand, renting an apartment also requires some deposit and it’s your financial muscles that will dictate which option will work best for you. There are various online rent vs buy tools that you can use to determine the most financially viable option that can best suit your current state.
If you are not planning to stay in that area for a very long time or your home/lifestyle requires relocating to a different neighborhood frequently, renting an apartment or urban condo unit is a great alternative to buying.
Renting an apartment also comes with fewer maintenance responsibilities as there is no ownership involved. However, they have limited customization options in terms of lifestyle choice and renters enjoy less privacy.
Pros of apartments
- They offer greater flexibility when one needs to move
- Less to no maintenance costs as property owners take responsibility
Cons of apartments
- You miss out on ownership perks such as reduced taxation and building of home equity
- Limited lifestyle freedom as renters have to abide by the landlord’s rules
- Reduced privacy and involves shared amenities
The decision of the type of property that you should opt for should be informed by several factors such as your financial muscle, the space that you need, your planned stay duration, how much down payment you can manage to raise, and whether you can get repair time or cater for frequent maintenance and repair costs.
The good thing is that you can get a property that matches your financial strength and lifestyle needs. When searching for a property to buy, visit different open houses and search for different online listings in your local market to find out the type of properties available and their pricing range.
If you want a much better deal as a real estate investor, you can buy a pre-construction condos in Toronto. Pre-constructions are sold at affordable rates and are now recording the highest appreciation rate compared to other types of properties.