Nor are things getting easier for investors buying condos in the resale market. In 2022, less than a fifth of resale condos bought and rented out were cash-flow positive. This is comparable to prior years. However, investors last year were 60 per cent further in the red than in 2021, losing an average of $537 a month.
One possible result of a shift in investor behaviour could be a push toward more purpose-built rentals. Currently, developers are reticent to put up those buildings because they have not been as profitable as condos, and because construction and management is a much longer endeavour. But purpose-built buildings or apartments in pre-existing buildings offered by rental associations are often considered more ideal, as they are managed by a professional landlord and because their rent tends to be cheaper.
And for most investors, units are still turning a profit over the longer term, said Avis Devine, an associate professor of real estate finance at York University’s Schulich School of Business.