GTA Investment Homes Going Through Loss

A real estate brokerage said that most of the homes that were purchased in Toronto by investors last year are losing money. John Pasalis, president of Realosophy gave an estimate that 95 per cent of investment properties bought last year are not bringing in enough to take care of bloated purchase prices despite the increase of rents. Pasalis determined a loss of more than $1,200 for each home based on the mortgage for properties with typical terms and a 35-year term.

Rendering to his calculations, investors bought more than a third of properties purchased in Toronto’s fieriest neighbourhood in the course of last year. Foreign cash buyers are the ones who are profiting from their investment.

Tighter restrictions on lending was called for by Pasalis. He stated; “Lenders currently underwrite mortgages for residential investment properties as if they are owner occupied homes, resulting in a loophole that allows buyers to finance money-losing investment properties largely with debt; these loopholes should be closed by tightening lending practices.”