A friend asked me if I thought that he should continue to hold his Downtown Toronto Condo as an investment. He had been thinking that it could be time to Sell or Assign the Condo - and cash in on his initial investment. It was a simple enough question...the answer was: It depends on what you mean by investment. ;)
When we got into the details, he indicated that the condo that he had invested in was something that he purchased from the developer 3 years ago - and that the property had appreciated significantly in value. As the Canadian Real Estate market has been on the rise, he expected that the value of the Condo to continue to rise. He was very proud of his investment decision and could not wait until 16 months from now when the project would be complete and the title changed hands. Given that it has been a long and cold winter in Canada, after some discussion, we wound up on the discussion of whether Toronto or Florida Condos were infact the better investment - which I will talk more about next time.
When we peeled back the layers we got to the fundamental discussion on what is a good investment. What characteristics does a good investment have. He was quite knowledgeable about finances - having held Stocks, Mutual Funds, Self-Directed retirement fund, personal residence and an Investment Condo. But by the end of the conversation we had come to some simple truths about our own investment philosophy:
- A Savy Investor treats all investments unemotionally and fundimentally does not treat Property investments different than Equities when it comes to Risk/Reward;
- All Investments have an Investment Horizon, Investment Potential and Risk Profile - these should be thought through; Investors compare ROI based on similar risk profiles.
- Legal and after tax implications need to be considered in the investment -especially when the investment has an international component.
- It is better to invest in something based on the principle of economic value and capital appreciation potential - than to invest based on speculation of investment potential.
- Owning shares of Fortune 500 companies can not be enjoyed by your family and friends; while owning a Condo in a sunshine destination can have ancillary benefits. Furthermore, such a benefit has a monetary value and should be factored into the calculation.
I crunched the numbers and was pleasantly surprised about the investment potential of properties in Florida. After visiting Orlando, Miami and Boca Raton, I also surprised myself as to the economic value that I ascribed to having an affordable vacation home in Florida at my disposal for ready use - where I could enjoy with family and friends - away from the blustery winter weather in Toronto, Canada.
- This posting represents my viewpoint - not professional investment or legal advice
- More to come about Snowbirds / Canadian Investors and Vacation Home Buyers in Florida.
- More to come about options for Toronto Condo Assignments and Condo Sales.
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