In an ever changing Toronto Condo market, finding great 1 bedroom units, in good buildings and great areas, for less than 500K, can be a challenge. But it is still totally possible. I have outlined a few recommended condo building for 1 bedroom units under 500K in another article. But this is just to name a few. The reality is, often times 1 bedroom units will sell for less than 500K in higher priced buildings, or higher prices neighbourhoods. There are a few one-off opportunities, and I have outlines below how to find them.
The 500K 1 bedroom condo market is highly competitive. Many condo buyers are seeking 1 bedroom units in the core, with a 500K price cap. This factor can easily drive up prices for specific buildings and units. You will find lots of value here if you price cap is dead set to 500K.
1. Forget Parking
This is by far the biggest caveat. Granted, you may find a few options outside the core, or the odd case where a 1 bedroom unit under 500K has parking. But, when it comes to the downtown core, parking is hard to find under 500K. If you want prime location, and a good building, and a true 1 Bedroom unit; leave out parking and your options will be vast! Parking is not needed for condo dwellers in the downtown core. There are so many other options for getting around: car sharing, TTC, walking, Uber, Taxi, it’s endless. If you can’t bump up your price to the mid to high 500s, trust me this is the best place to start to find a great 1 bedroom unit.
A parking space downtown can run anywhere from 50K to over 70K, depending on location and building. This adds a lot of value to the unit. Realistically, when living and working in the core, a car is not a viable option for getting around. So don’t pay for it! A lot of buyers think parking adds value to the unit. Yes it does increase the sale price overall, but no parking doesn’t destroy the value. In fact, having no parking lowers the price point for the one bedroom units, thus increasing the demand of buyers, making the unit an easier sale. Renters don’t care about parking either, that’s why they buy in the downtown area, so they don’t have to drive. No parking space also lowers your monthly maintenance fees by around $75 on average.
Tip: if parking is an absolute must, try renting a space in the building. Likely cost around $150 – $175 in most buildings. This cost will be just about the same as owning the space, factoring in $75 a month for maintenance and the 60K extra purchase price. You can use the parking as needed and easily stop renting when not needed.
2. Be cautious with units listed for 499k
Searching for Toronto condos online is great, but you don’t get the full picture. Sellers and selling agents love to list units at 499K, no matter what the true sale value will be; 525K or 625K. Yup, were talking about bidding wars and multiple offers. Every unit you see listed for 499K, try to find out what the realistic sale value will be. Do this before racing to see the unit in person and wasting your time, or worse, putting in an offer when you never had a chance. Not all units listed at 499K are holding offers and expecting a higher sale price, but a lot are! This has been one of the greatest challenges myself and my buyers have faced when searching for 1 bedroom condos under 500K. I only show my clients the units I know will sell for less than 500K, but they see a lot more online. Once you understand this concept, it makes searching for a condo much easier.
Tip: Understand the sales data, see where trends are for the area and building. Trust your realtor to give you the realistic price points for each unit you see. BONUS: Use T.Condos to search for condos, we provide an estimated sale price for every unit listed on TREB, in real time. You will see the units that are under listed, and know what they will actually sell for.
3. Find Tenanted Units
Tenanted units can be a great opportunity to get an otherwise higher priced unit, for under 500K. 3 simple reasons:
1) The obvious reason being tenants mistreating the unit. Simply put, not all tenants have the same pride of ownership that owners do, in some cases. The unit condition may not be up to the standard of the other similar units selling for a higher price in the same building. A little bit of TLC and the unit is just as nice, if not better than the other units selling at a higher price.
2) There doesn’t even have to be any costly repairs for a tenanted unit to be lower priced. Sometimes tenants don’t furnish or decorate a unit very well. They may have downsized from a large home and have bulky furniture that doesn’t fit the space well. They may have old or misplaced furniture, or even odd decorating tastes like paint colours, or keep the unit a little messy. This concept is subtle but can have real effects on the final sale price of a unit. Ever notice the beautifully staged condos get high prices and sell fast. Well the opposite effect can happen too! And there is nothing wrong with the unit at all!
3) And the last one is really unique that many condo buyers don’t know about. The condo unit can be in perfect shape, well cared for, decorated perfectly and shows 10/10. But if the tenant is difficult with showing times and schedule, this limits the amount of buyers that can see the unit and make an offer. Less people seeing the unit, less attention. EX: a tenant is only allowing showings on Tuesdays, Wednesday and Thursday from 11am to 4pm, all with 24 hours minimum notice. Well… this significantly reduces the amount of people that can see the unit before someone makes an offer! A great unit that no one can see, doesn’t sell for top dollar (in some cases).
Tip: Try to be flexible with your availability to see units that are tenanted. Take a lunch break or skip out of work early some days to see the unit. Also keep an open mind about the work that can be put into improving a unit in a condition that doesn’t meet your needs. You can save tens of thousands on the purchase with just a few hundred or thousand dollars in improvements.
4. Be quick to see the unit. Get in before other buyers.
This huge! Speed is everything when it comes to a competitive market like Toronto 1 Bedroom condos under 500K. Speed to viewing the unit (SVU haha jks) is critical to ensuring not only getting the unit, but getting it for a good price. If a unit comes up for sale and hits all your must haves, well guess what.. it hits the must haves for many other buyers too. If you can view it the same day it comes up for sale, or at minimum the day after, you will see the unit before so many other buyers. Get your offer in same day and bet the rush! It’s been proven so many times (specially by me). This still works even if the seller is holding offers. Make a great preemptive offer, get the sellers excited… done! All before 10 other buyers see it, and the price gets hyped up passed your purchase price cap.
This strategy works super well for a buyer with a 500K cap, but wants the best unit their money can buy. Specifically because every single buyer wants the best unit their money can buy. So there is competition to get it. EX: If a unit comes up at 499K that hits the entire check list, not holding offers (so the unit is priced right based on sales), get in to see it the same day it is listed, make an amazing offer that day, and enjoy the opportunity to negotiate one on one. Get to pay the asking price or lower in many lucky cases. The alternative is to wait to see the unit one or two days later, try making an offer and finding out there is already 2 or 3 other offers. Now you must compete, and the price is the most significant factor. Unit sells for slightly over the listed price, and thus you don’t get the unit.
For many buyers, 500K is their max, absolute max price they can pay. Bank won’t let them spend more, they also don’t have the available cash beyond their down payment to cover the overages. So SVU (Speed to View Unit) is super important. It means the difference you getting the unit for under 500K, or the unit selling just 5K or 10K over. Which is just enough to push you out.
Tip: Increasing your SVU is simple and boils down to 2 main things you need to do: 1) ensure your realtor has you set up on instant notifications for new listings. Searching online, or getting property matches the next day is too long. You will get not hourly notifications… but INSTANT. 2) You the buyer must be flexible with seeing units. It sucks, I know. But it takes only 15 minutes to see a unit. Don’t wait for the weekend, don’t wait until after soccer. Just find the time.
5. Look just around the corner in the main areas.
I know you want to live in the best areas, so hear me out here. If you want to be in the downtown core, King West, Financial District, Waterfront, you will soon learn these prime areas come at a premium. But if you want to stick within your price cap, look just outside these areas and options will present themselves. Sometimes being a 5 to 10 minute walk away from the main area will save you 10 to 20 percent of the cost. The area is the same, just that the door step of the condo is not immediately in the action. 2 examples of this: 1) King West. It is expensive to live on King Street West, or in many of the luxury boutique condos in the area. But if you explore a few side streets off King, or even 5-10 minutes west of Bathurst, the options for lower priced 1 bedroom units really open up. 2) Waterfront. This area is known for wonderful buildings, water views, and lots of entertainment and excitement. Living right in the core areas around York and Queens Quay or Yonge Street come at a premium. But there are many condo buildings within a 5-10 minute walk from the waterfront that provide great options for 1 bedroom units, and still super close to the areas.
Tip: Prices for condos in Toronto change at every turn and every corner. Every building offers many different unit type and has different price points. Look just off the main area, and your options increase. Get familiar with the different buildings and streets within an area. Know the prices for the buildings, and where you can save by being just 1 or 2 streets off the main area.
6. Consider a longer commute
This one is obvious right? I’m sure you thought of this one as well. But really consider your all options, and consider different commutes. Commuting to work in Toronto doesn’t have to mean living completely outside of the city. Consider different ways of commuting. Driving, Street Car, Bus, Subway, Train etc. Look into all your options around the downtown area, and maybe consider a different neighbourhood. For the most part, being outside the downtown core means 2 things: 1) You can get a bigger better unit or 2) you save on the purchase price of a similar unit. A unit on the Subway line could be just the same commute time as walking if you lived in the downtown core, but you get a better unit being further away.
Tip: Know the transit system well. Get to know what buildings are close to, or directly on a street car line or subway line. This makes commuting easy, and opens up so many great options within the price range.
7. Avoid Iconic Buildings
Iconic buildings, prestigious building etc, come at a high premium. Absolutely living in the Bisha or Thompson or Shangri-La is amazing. But these building, among so many others, have higher sale values and potentially higher monthly maintenance fees.
If living in an iconic building is a must have, wait for a smaller unit, often a studio unit, to come up for sale. Studio units are a great way to get into the building you absolutely want and stay within the price point.
Tip: When looking into studio units, there are 2 things you must consider: 1) Ensure your bank will not have issues financing a unit under 500 sqft, or in some cases, under 400 sqft. Banks sometimes see small studio units as a higher risk. But truthfully, they are not. The demand for smaller units and micro condos is becoming increasingly popular in Toronto. 2) Studio units are small, and you lose the bedroom space. Your living is combined with your bedroom. You lose closets and living space. Explore really good space saving furniture, explore extra storage in the building or even off site if needed.
8. Consider Smaller Units
Price per square foot is how the value of condos is determined, among other items of course. The closer to the downtown core, and within specific neighbourhoods, the costs will go up. This is also true from building to building. Each building has a different cost. Depending on location, building and the unit type and size you need is critical to finding the perfect condo unit. You can reduce the size of the unit and live in the exact building or area you want. Or the other way around; find the perfect unit size in other less expensive areas.
Tip: Determine the average cost per square foot for building you are interested in, and neighbourhood averages. This will quickly help you determine what unit type and size you can expect in each area. We know King West is hovering around $1000 per sqft. and St. Lawrence is around $850. Once you know this, it helps define what size and location is ideal for you.
9. Consider Older Buildings
Many of the newer condos, say less than 6 years, are luxury condos, or condos built in prime areas. Condos builders have been focusing on building luxury condo, or condos in prime areas. Meaning, most of the newer stuff is expensive. You don’t need to go looking for 50 year old buildings, but finding buildings over 10 years, 15 years could be a great option to get a 1 bedroom unit without paying for the premiums on the luxury building, or prime location. Newer condos have been maximizing the space within the unit, making the living space more efficient. But more efficient means less space. Slightly older buildings in the 10+ year range can offer more functional floor plans, open space and full size appliances. Often, not only is a 10+ year old building slightly less expensive, but offers more space. Bigger (often better) unit for less money?? … Yes please!
Tip: A building in the 10-20 year range shouldn’t have too much to worry about. If you are looking into buildings more than 20 years old, just check a few items before getting excited: Heating type, maintenance fees, building management, building budget and items needing updates on the building, wear and tear on the unit and possible updates, among other items.