Many parents automatically accept they’re going to be losing a significant amount of money paying for their children to go to university. There’s the tuition, books, necessities and, of course, the rent – something that has many parents looking in downtown Toronto grimacing.
Jamie Johnston, broker of record and owner of Re/Max Condo Plus, says parents can expect to pay $1,300 a month for a studio apartment and as much as $2,000 a month for a two-bedroom apartment near Toronto’s universities. That simply amounts to a lose-lose scenario, he says.
The better strategy for parents, Johnston says, is to purchase an apartment condo for their children and put the money they’d be wasting on rent towards a mortgage.
“Parents should be buying condos for their children going to school. That’s the strategy. Rather than them paying $1,300 to $1,500 a month to rent a place for their child, they can buy a place, and the way the market’s going, the condo’s going to appreciate in value over the four or five years that they own it,” he told CRE Online
In fact, Johnston says condo-owners in the downtown can expect to see 5% to 7% annually, which definitely adds up in a few years.
By working with a good Realtor, parents may still be able to find condo-apartments in the downtown area for $250,000, Johnston says
Unfortunately, there really are no opportunities to buy detached homes in downtown Toronto and rent them out to students, Johnston says, especially since many of them are as much as $600,000.
“If you do the math, the math doesn’t work. Given the ratio of rentals to prices this is not a good market for North American investors because non-residents are buying up the market. They’re paying cash, and they’re prepared to accept lower yields,” he says. “I think the student rental market is an excellent market, but in small towns.”
He suggests investing near McMaster, Brock or Windsor University.
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