According to one investor, who shared his experience on the CREW Forum
, investing in micro-condos has been worthwhile, contrary to the popular belief that lenders want nothing to do with these properties.
“I bought mine in an area specifically close to a bunch of post-secondary institutions [in Montreal] so it would be easy to rent out to students,” added the investor. “Another plus to micro-condos, aside from the price, is the low condo fees given the smaller square footage.
“There is access to all amenities but the condo fees are less than $100 a month. So far, I am very happy with the micro-condo idea.”
The investor’s comments on the CREW Forum
come as micro-condos continue to grow in popularity as an alternative for Millennials looking for urban property they can afford.
Despite the demand, some real estate agents have highlighted financing as a key issue for lenders as Millennials try to access a mortgage. As a result, some are forced to rent and are looking to micro-condos as an option.
“The concern is the type of buyers that are interested in these condos,” Chris Molder of The Mortgage Centre told CREW’s
sister site, MortgageBrokerNews.ca
“Many are being marketed as great rental opportunities, and that’s not something that, in the case of a downturn in the market, lenders want heavily on their books. Rentals become a bit of a luxury when markets become repressed.”
The CMHC released a report earlier this year indicating that condo demand is going to increase as more immigrants flock to larger cities like Toronto
Micro-condos have become popular in cities like Surrey, B.C.
where a unit can go for just over $93,000 for a space as small as 320 square feet.
While the idea of smaller, more affordable units in the city core is attractive to first-time buyers, many have been surprised by the lack of mortgage options when the time comes for financing.
“With these micro-condos, there hasn’t really been a market established for them in terms of resale, so they have no idea [what the resale market will be like],” said Molder. “Lenders are playing it safe to see how it all pans out.
“That’s really what I think is happening: no one wants to be a chump. Some lenders are doing it, some aren’t.”
This may be the case, but the CREW Forum
commenter said that his experience has been pleasant and that he believes micro-condos are growing in popularity among investors.
“It's not hard to get a mortgage for micro-condos,” added the investor. “Typically, the larger banks do not lend for them, but there are a number of others that will with very good interest rates.
“I also believe that it will be a trend to watch in the coming decade with a number demographic factors contributing to the attractiveness of smaller living.”
Join the discussion about micro-condos on the CREW Forum
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While there has been concern in the real estate industry about financing options for micro-condos, some investors are cashing in on the lucrative opportunities this property type offers.