Speaking historically, real estate has usually made for an ideal investment – especially in Ontario’s more active markets. More specifically, buying a dedicated investment property with the intention of earning quality passive income on a monthly basis has long been a great way for investors of all kinds to build personal or generational wealth.
That said, real estate has shifted somewhat over the past few years, and with new market conditions come new variables for investors. As a result, some future investors are currently waiting on the sidelines and considering whether or not 2025 is finally the right time to make their move.
As an experienced Ontario-wide team of real estate experts (who work with investors almost every day), we’re here to help you make an informed decision that supports your goals. In this blog, we’ll break down the pros and cons of buying an investment property in 2025.
What Are the Pros?
Ontario’s Track Record of Growth
Like any kind of major investment, it’s important to look at the numbers before you dive in head first. In the case of buying a dedicated investment property in Ontario, you’ll want to look at data from both the past and present to predict how things may look in the future.
When we look at the past, Ontario’s real estate market has demonstrated consistent long-term growth, particularly in high-demand areas like the Greater Toronto Area (GTA), Hamilton, and Kitchener.
That said, a market that expands over time can provide investors with a strong value appreciation in the long term – increasing their odds of a lucrative sale down the line.
High Rental Demand
Market growth (especially when fast-paced) often goes hand in hand with an increased demand for rental housing. To that end, Ontario’s growing population, which has been continuously bolstered by the province’s strong economy and Canada’s immigration targets, the demand for rentals is ever-present. When the demand for rentals goes up, so do average rental rates – contributing to better returns for investors.
While there can be fluctuations in demand and rate variations based on specific markets, the province’s high demand for rentals is unlikely to change – giving investors plenty of room to capitalize.
It’s Hands Off (Mostly)
Finally, one of the best perks of buying an investment property is that it’s a mostly hands-off investment. In other words, there’s not a ton of day-to-day work involved. This is something that will likely hold true regard to how markets change.
Sure, there are few weekly and monthly responsibilities that come with property and tenant management, but it’s by no means a full-time job. Plus, the more time and effort you put into choosing the right tenant for your property, the easier things will be in the long run.
Looking for more real estate advice? Explore these related blogs for tips on making the most of your next purchase.
- How Long Should You Plan Ahead Before Buying A Home?
- How To Improve Your Credit Before Buying A Home
- Should You Get Pre-Approved Before House Hunting?
What Are the Cons?
The Costs
It’s often said that the right real estate investment pays for itself. There’s a lot of truth to this. After all, the passive income you earn through rental tenancies can cover a big portion of your mortgage. However, one of the main challenges that can come with buying an investment property in 2025 is the upfront costs.
Changes in demand as well as other factors like shifting interest rates have elevated the costs of buying and owning real estate. Today, investors often face fairly significant upfront costs, including down payments, closing costs, land transfer taxes, and legal fees. These expenses can limit accessibility for first-time or small-scale investors.
All that said, you’ll need to have a strong financial plan in place before you invest. However, with the right financial strategy, you can ensure that your investment pays off in the long run.
New Regulations
In light of Ontario’s upward rental rates, the market has become much more regulated to protect tenants. While this stability benefits renters, landlords may encounter challenges such as navigating eviction processes or adhering to strict rent increase guidelines under the Residential Tenancies Act – also known as the RTA. As a landlord, it’s your responsibility to stay up to date with the necessary regulations and restrictions with respect to your investment.
Looking to buy an investment property? Our team of experienced agents can help you achieve your real estate goals. Give us a call at 416-322-8000 or reach us by email at info@bosleyrealestate.com.
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