Is Toronto Real Estate Still a Viable Investment? Analyzing the Numbers


In this episode of the True Wealth Podcast, Seun Adeyemi and Othniel delve into an important question for investors: Is Toronto real estate still a viable investment? They address recent concerns about investors facing losses in Toronto’s real estate market and conduct a thorough analysis of the numbers to provide insights into the current market conditions.

The Challenge of GTA Condo Investments:

Seun and Othniel discuss the sensitivity of the condo investment market to various factors such as interest rates, supply and demand, and rental rates. They acknowledge that while purchasing condos a few years ago seemed profitable due to lower costs and less competition, the landscape has changed. Investors who bought condos during that time are now grappling with challenges, especially with rising interest rates, which can potentially lead to cash flow issues.

Analyzing the Numbers in Toronto’s Downtown:

To illustrate their point, Seun and Othniel examine the numbers for a small downtown Toronto condo. The average purchase price for a one-bedroom condo is approximately $630,000. When factoring in a 20% down payment, current interest rates, property taxes, and condo fees, the total monthly carrying cost amounts to around $3,400. However, the estimated rental income for such a property is around $2,500, resulting in a monthly deficit of $900. This substantial loss renders it an unsustainable investment for most individuals.

Exploring Alternatives in Oshawa:

Recognizing the challenges within the Greater Toronto Area (GTA), Seun and Othniel propose exploring investment opportunities outside of Toronto. They consider Oshawa, where a detached three-bedroom home can be purchased for a similar price. By removing the condo fees from the equation, the monthly carrying cost reduces to $3,000. However, the estimated rental income for the property remains around $2,500, resulting in a monthly loss.

Long-Term Capital Appreciation vs. Cash Flow:

The hosts discuss the strategy of relying on long-term capital appreciation rather than cash flow and caution against assuming that property values will continue to rise at the same rate. They emphasize the importance of evaluating opportunity costs. With a significant monthly deficit, investors must consider alternative investments that offer better returns without the added expenses and challenges of managing investment properties.

Accounting for All Costs:

Othneil and Seun emphasize the significance of proper accounting when evaluating cash flow in rental properties. They note that carrying costs, such as mortgage payments, property taxes, and condo fees, should not be the sole factors considered. Additional expenses, including vacancy rates, property management fees, maintenance, and repairs, must be factored in to accurately assess cash flow. By accounting for all costs, investors can determine the target rent necessary to achieve their desired cash flow goals.

Determining Rental Rates and Property Expenses:

To achieve a $500 cash flow per month, Seun suggests that a property with an average rent of $2,500 would be ideal. This means investors need to find a property with carrying costs around $2,000 per month. Seun further explains that based on today’s interest rates, a property in the $380,000 to $400,000 range would be suitable. However, finding such properties in the GTA at that price point while still being able to rent them out for $2,500 can be challenging.

Expanding Units and Dealing with Regulations:

Given the difficulties of finding affordable properties that can generate the desired rental income, Othneil and Seun discuss the possibility of expanding the number of units within a property. By converting a single unit into multiple units, such as adding a basement apartment or creating separate suites, investors can increase their rental income potential. However, this strategy comes with its own challenges, including the need to register the units, comply with safety regulations, obtain permits, and undertake necessary renovations. These additional costs and complexities should be carefully considered before pursuing this avenue.

Changing Rental Landscape and Increased Regulations:

Othneil and Seun highlight the evolving rental landscape in the GTA over the past few years. They explain that the increase in rental prices has led to heightened tenant scrutiny, resulting in more reporting of unregistered rental units to municipal authorities. The enforcement of regulations has become stricter, leading to potential legal and financial consequences for landlords. Additionally, the rise of platforms like Airbnb has brought increased scrutiny from neighbors and officials, leading to crackdowns on unregistered rentals. This evolving environment necessitates a thorough understanding of the rules and regulations, emphasizing the importance of upfront planning, registration, and compliance.


Investing in rental real estate in the GTA requires thorough analysis, realistic expectations, and a competent team. Othneil and Seun caution against approaching rental properties as casual investments and highlight the increased financial stakes involved in today’s market. They stress the importance of building a team of professionals who can provide expert advice and guide investors through the complexities of property selection, expansion, and compliance with regulations. While the GTA may present challenges, opportunities still exist for those willing to explore alternative locations and work diligently to navigate the changing rental landscape.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not constitute financial or investment advice. Readers are encouraged to seek professional guidance before making any investment decisions.