A Toronto Condo Only Returns 12% Over 10 Years?!

Why It Matters

This frames Toronto condos as a leveraged, long‑horizon play: they can deliver healthy IRR over a decade despite negative monthly cash flow, but they pose risk for short‑term buyers and those seeking immediate income. Investors should prioritize holding period and realistic appreciation assumptions when assessing condo deals.

Summary

The speaker argues internal rate of return (IRR) is the best metric to evaluate condo investments, because it captures timelines, selling costs, rent and occupancy. Using a hypothetical one‑bedroom bought for $420,000 with $550 monthly fees and a 2.5% annual appreciation assumption, a 10‑year IRR comes to roughly 12%. The investment is unlikely to produce positive monthly cash flow—investors will still be cash‑flow negative—but leverage plus inflation‑linked appreciation drives the overall return. The speaker cautions that a five‑year holding period is too short for this thesis to work reliably.

Original Description

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