I remember my first year in the business, when I was the “new” guy in the office, and I would get all the leads that no one else wanted. Of course, I was happy to get any lead at the time, so I could get to work and learn not only how to get a deal done, but how different people think and behave in this business.
And from my rookie perspective, some of the leads I would get sounded promising and even exciting. I remember one in particular, let’s call him Victor, who strolled into the office one day looking for a realtor – maybe that should have been my first warning sign – who ended up sitting in my office telling me he was going to be my “golden goose”.
A Red Flag?
Now in hindsight I know this should have been a red flag, but I didn’t have much to lose at the time, and I thought every interaction was an opportunity to learn, so I indulged him. He went on to tell me that he was an investor and planned to purchase between one to three properties a year and expected to become a very important client of mine. Again, this sounded interesting at the time, so I agreed to show him some properties and discuss his criteria in more detail.
You probably know where this is going, but to make a long story short, it turns out Victor had absolutely no knowledge or experience with purchasing or maintaining an investment property and was under the impression that he could find and buy “distressed” properties for fifty cents on the dollar in a pseudo effort to “get rich quick”. I ended up politely telling him that this just wasn’t possible, especially in a city like Toronto, and we parted ways. It was a little frustrating at the time, but I learned a lot from that experience and although I’m not 100% sure what happened to Victor, I’m almost certain he never transacted in real estate.
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Is there Such a Thing as “Cheap” Real Estate in Toronto?
I’ve since met other variations of “Victor” throughout my career who have a similar disillusionment that they can buy prime real estate for pennies on the dollar in one of the hottest real estate markets in the world, but it now makes me smile. Some people just can’t be helped, but this doesn’t mean you still can’t get a deal in Toronto.
In fact, since my first interaction with Victor, I’ve now made an art out of finding and negotiating some of the best deals in the city for our clients; and there is no greater feeling than winning a great deal for your legitimate client!
There’s a lot of intangibles involved, i.e. relationships, market knowledge, deal flow etc. but there’s some fundamental rules and tips to help get you started.
How to Find “Cheap” Real Estate
First off, be realistic. As my anecdote above alluded to, even the most motivated seller in the country isn’t giving their real estate away for free. If you’re looking to get rich overnight, you’re probably better off buying lottery tickets.
Secondly, do your homework and get your ducks in a row. If you do find a good opportunity, it’s unlikely you’re the only one looking at it. Start to build a good team around you and identify what your budget, criteria, and objectives look like before you go tromping through an open house. Talk to some other investors or agents and build your knowledge of where and what to look for. A good agent should take the time to chat with you before you ever start working together, so this can be a good place to start. They should also be able to connect you with a worthwhile mortgage broker too and much like agents, mortgage brokers work on commission and are compensated by the lender, so there’s no upfront cost to you. This way you can start to define your objectives and find out what you can realistically afford before making any commitments.
Learn more about buying a home in Toronto with these posts next:
- Is it Possible to Buy Your First Home in Toronto Today?
- How to Choose the Right Type of Mortgage
- Is it Smart to Buy a Home when Interest Rates are High?
Perhaps the most obvious, and one you hear a lot is; location, location, location. You’ll need to identify areas that not only fit your budget, but also have strong projected rates of appreciation. Many of the best deals I’ve done on the buy side have been in and around areas undergoing some sort of transition, but this is really where you’ll want to make sure you have an agent who knows the city well.
And beyond finding an agent that can identify a good deal, you’ll also want to make sure they can get you into the property and complete any necessary due diligence fast and efficiently so you’re able to make an offer before the competition does.
Lasty, I’ll say that just like a good joke, timing is everything. The real estate market is cyclical, and although not every year looks the same, there are trends to watch for. Statistically, the summer months and the dead of winter months record the lowest average prices within the calendar year, so this is worth keeping in mind. But there’s also very little inventory during these times, so really the best time to find a great deal, is within the small window in between the booming Spring and Fall markets and the slower summer and winter months.
Of course, once you find the right opportunity, you’ll then need to formulate the right negotiation and offer strategy but that’s a story for another day.
Looking for help finding a property in Toronto? Reach out at any time by calling 416.642.2660 or emailing admin@torontorealtygroup.com. We’re always happy to chat!
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