In Canadian Real Estate (CRE) TV’s recent Investor Insight segment, Jemima Codrington talks about the recent changes in condo investment activity which entails that investors nowadays hold on to their condos instead of flipping them.
Despite the heating up of the booming condo market, it would seem that investors see that hanging on to their investment would be a more profitable option, According to Matthew Regan of Royal Le Page, the idea behind this all boils down to the fundamentals of supply and demand. If the investor sees that a building has been experiencing low inventory in the market, he may still conclude that there’s a demand for the building and may decide to take the money and equity out of the unit. On the other hand, if the investor sees a lot of supply in the building this may keep the prices low and if the ROI isn’t there then the investor may just continue to rent it out as long as this still seems a viable option.
The question that comes to mind is, “what contributing factors have led to the change in the mentality in condo investing strategies?”
Tarik Gidamy of TheRedPin.com states that since prices have been rising, investors are looking into the future. “ Investors will be waiting until the building settles, the flippers and signers are out of the way and the building has a chance to gets its character and hold on to it in a sense that money is still cashflow positive starting the day that they rent.”, Gidamy stated. He also mentions that this may be because some are buying condos for their kids to keep for a long term hold since, overall, this kind of investment would be the safest bet in terms of keeping your money in a safe place, as compared to what investors usually do which is getting your money in and out.