I have been getting tons of emails from first time buyers looking for condos in the $150,000 price range in Toronto. This flood of emails carries a heavy burden on my web site operations as the volume has been just so great that I really have not even been able to answer lots of it. That’s where the heat is coming from. I wish I could converse with everyone who writes me but the volume simply has been too much!

As the title shows, a $150,000 is "Virtually" gone. There are some studio condos that appear every once in a while that challenges this statement but, over all, unless you are willing to consider living in about 400 square feet you are better served considering renting a modest apartment for a couple years and buying into a presale development.

Unfortunately, my research over the Christmas period (the only time I actually had any time) shows that only King’s Court at Sherbourne and King Street could physically deliver a unit in this price range despite a number of ads in the Free condo magazines specifying prices from under $150,000 (tells you something about how condos are marketed).

King’s Court has a couple of units in the 400+ square foot range that can fit this bill. I had a client in Edmonton contact me last week asking me to find him something in the $150k range and I relayed basically this article to him. He replied to me by asking me to find him the best rental income suite that I could find him as close to $150,000 as possible.

Actually finding something new even proves a challenge. Cityplace is pretty much sold out of this kind of product in it’s most recent development "Harbour View Estate" but has a new tower on the horizon that may prove interesting to a lot of first time buyers. My advice to you is to Register with me PRIOR to talking to them (they will pay me Buyer Agency Fees for you as long as you have already Registered with me). I am putting together a group of first time purchasers and will negotiate preferred rates and/or terms and conditions based on this volume so Register with me today and I’ll get you the best deal possible!

King’s Court came out with the most competitive sub $170,000 suite with a 440 square foot south facing high floor alcove suite priced at $168,900. The interior package is impressive and the location is difficult to beat.

The Residences at First Toronto Tower has a high floor south facing studio condo in the $175,000 price range. This is a very exciting development located at Richmond Street and Bay (roughly) right in the heart of the Financial District with neighbours such as First Canadian Place, Scotia Tower, Commerce Court, etc. This glass clad skyscraper will come in at approximately 58 storeys. This development has good ceiling heights (9 feet on lower floors and 10 on upper) with floor to ceiling windows.

8 Park Road, a highrise development added to the Hudson Bay Centre at Bloor and Yonge Streets has just started occupancy in late November 2002 and has a small unit (approximately 600 sq.ft.) priced at $178,000. The ceiling heights are only eight feet and the living area is small but in a 600 sq. ft. one bedroom with ensuite laundry one would expect things to be small. The bedroom has a nice bay window and the unit does offer unobstructed north and east views over everything in the area. Most suites offer great views as the condo is built above the parking for the Hudson Bay shopping concourse. The downside of this is that you must take one elevator to the concierge level and another to your suite. Construction quality is standard. Interior finishes were based on upgrades which means that you never know what you get until you inspect the units. Many were purchased by speculators who don’t upgrade the suites that they purchase.

By the way, a 555 square foot one bedroom plus den unit at Elev’n 21 Bay at the corner of Charles and Bay Street was posted on MLS today at $239,000 without parking!

Once I realized that we were going into the $175,000 price range to qualify as a sound investment for my client I quickly turned back to The Hudson at King and Spadina. When you are buying a condo you have got to have a concise understanding of your objectives. Investors buying to rent out the suites or resell them approach the challenge quite differently (and rightly so) from end-user purchasers.

The Hudson has a 553 square foot one bedroom unit priced at $168,900. I like this development for a number of specific reasons. First off it offers a fully upgraded package. Most condos offer a base unit with upgrade potential for example they come with laminate countertops in the kitchen and if you want to spend an additional amount (usually substantially marked up by the developer who contracts the work out) you can have granite and they come standard with carpet but for an additional fee (again marked up by the developer) you can have engineered hardwood installed. The same applies with appliance packages, bathroom appointments, etc. The Hudson delivers all of these upgrades in it’s base package at $168,900! When you tag on the merits of the developer (Barclay Grayson), my endorsement shows its justification.

My research covered the Toronto downtown market quite extensively and I’ll be happy to share the outcome with anyone who would like. Please email me and I’ll follow up with you.

I mentioned above that those of you looking for a $150,000 condo might be best advised to rent for the next couple of years and purchase a presale condo. Your other option is to move well out of the downtown core but then you’ll pay in commuting time and costs (car, gas, etc.) Parking downtown today is between $20,000 to $35,000 per spot. Lockers run $2,500 to $5,000.

I don’t advise purchasing resale condos in this price range for a couple reasons. The first of which is that although you may find something in this price range (40 Homewood for example) but once you learn the area history you will not want to live there. If you need something right away and can live in small spaces I can find you some newer buildings with studio condos and junior one bedrooms close to this price but really you should be anticipating spending at least $200,000 for a quality core development.

The reason that I say rent and buy into a presale is straight forward mathematics. The science of real estate investing (whether you are looking for something to live in or rent out you are making an investment - possibly the biggest investment that you will ever make) is found in equity growth. Consistently core properties in Toronto have grown in value at approximately 4.5% - 7.5% over an extended time period. A recent ReMax study forecasts a 10% growth in real estate values across the board in Toronto in 2002 and another 10% in 2003.

With prices escalating at this rate (providing you are buying quality product) and saving account interest at around 1% real estate in general proves an attractive investment. Should you purchase a resale condo that you can move into right away, in theory (above) you can anticipate at 10% (based on ReMax) return but only if you can afford to play the game. If you finances restrict your ability to buy quality and you compromise your buying strategy by accepting less than premier location, developer or product the likelihood of positively capitalizing on your investment is slight. In other words don’t buy in a bad building, bad location or from a bad developer (what you didn’t think there were any of these!?!) just to "get into the game"!

My advice to you is to "rent for now and invest for then". That’s right . . . rent for now and balance this by purchasing into a presale development at "today dollars for tomorrow product" and then apply the equity growth against the rent that you paid once you move in.

When Cityplace first launched a couple years ago with their development "Matrix", I took purchasers there who purchased small one bedroom units with parking in the $150,000 range. Two years later I was buying these same units at $210,000 for first time buyers wanting to buy and move in immediately. That equated to a $60,000 profit for the original presale buyers.

Let’s look at the deposit structure that these original buyers had to face. Conventionally they deposited 5% with the Offer. They advanced another 5% usually about 90 Days after acceptance of the Offer and another 5% in 6 months or so with nothing else until occupancy when 10% was required thus delivering a conventional (75%) mortgage. So these early purchasers put down three installments over a two year period totaling $22,500 ($150,000 x 15%).

Just prior to occupancy these original purchasers became sellers of "Assignments" of their Agreement of Purchase and Sale (for a small fee many developers will allow purchaser’s to "assign" their agreement - a much more burdensome sale and something purchasers must be very astute about) so the last 10% installment may have been avoided should they choose to "assign".

So, with a total physical investment of $22,500 they enjoyed returns of approximately $50,000 - $60,000 which equates to a 200% to 250% return on investment! Take that to the stock brokerage world and see how many investments there have returned such conservative figures.

This is why I suggest to many first time buyers to "rent for now and invest for then" . . . certainly instead of buying low-end condos to occupy right away. Someday you are going to want to sell and the decisions you make today will materially affect your outcome then.

If you rent right you can come pretty close to balancing out on condo fees and real estate taxes for the term through which you rent. You will want to go to the bank and get pre-approved for a mortgage and once we see where you are at, we’ll start the process. The odds are that you are already renting something so we don’t have to worry about that end other than to say that minimum is best as we are trying to accumulate for the purchase of our own condo.

So now we want to identify the ideal target developments and again some simple research will suffice. Take a map of the city and draw circles on it setting out where you work, where you play and where you frequently visit. Think in the long term and try to come up with factors that might affect your life situation two years down the road.

Register with me and we’ll narrow down the field specifically to your lifestyle, finances and future interests. Once we’ve identified the right developments for you we’ll visit each site together and eye-ball the surrounding area and juxtapose the nonexistent development into the existing space and once we’ve got an idea of that, we’ll go in and find the floorplans that are of most interest to us based on our own criteria. Don’t worry about sales pressure as that’s all alleviate with you being represented by your own Buyer’s Agent.

Make your installments (I’ll negotiate a preferred installment package sometimes as low as a total of 5% down) and bide your time while the developer builds the building. In about 24 months (usually) you will receive an occupancy notice telling you the date on which you can move in.

Take the $50,000 - $60,000 equity that you should be enjoying (see above Cityplace history) and move into your brand new condo with all the latest greatest technology, appliances, etc. and enjoy the "sacred space", your own home where no-one else has ever lived.

The beauty of condo investing (whether to live in or rent out) is that as an investment it offers three distinct options that no other investment can offer. You can either resell the unit after enjoying it for a while (doing so entitles you to the ONLY tax free investment available to you in Canada), you can rent it out for income and to retain the equity growth, or you can move in and enjoy it. It has long been said that the absolute best investment is you home because everyone needs one and with no capital gains tax on a principal residence, from my perspective anyone investing in ANYTHING ELSE is just not thinking straight.

First time buyers and Buyers in general have got to understand that by walking into condo sales sites off of the street unaccompanied by a Buyer’s Agent is the single-most-significant influence that there is on prices and in the midst of the skyrocketing prices in Toronto every dollar counts. You’ll want to read my article "Someone Has To Buy The Dog Suites".

I am "pooling buyers" for new developments in an effort to keep prices down. I am also introducing an "Advertise You Own Condo FREE on simplycondos.com" to try to keep prices in check. My strategy with new developments is to bring a group of buyers and negotiate preferred rates and terms. When I arrive at a sales site with my buyers pool I’ll be able to negotiate preferred prices. Most sites will tell you that the prices are carved in stone and if you want to accept that then keep on keepin on. Read what my clients are saying about preferred rates that I’ve gotten them and imagine once we start going in with multiple buyers.

This article sets out the logic of Buying New for first time buyers and remember, when you buy new as a first time buyer you also don’t pay the Land Transfer Tax (approximately 1% of the purchase price). In conclusion I’ll close by asking you to take the most profound step possible in achieving your success in the purchase of a Toronto condo and Register with simplycondos.com PRIOR to visiting any sales site. For those of you who have already visited sites please write me right away and I’ll try to remedy the situation for you with the developers that you have already registered with.

Reputable developers respect your right to have your own professional representation when buying and will not allow that to stand in the way of getting sales for their products. If you have registered, let me know right away and I’ll see what can be done.

Looking forward to hearing from you.