Decisions : Condo Sizes

When scanning the condo market, investors typically want to know one thing – which condo size is most suitable for investment sake?

  • The obvious answer would be the largest, but typically it is most definitely not so.
  • Upon consulting with 4-5 people, you will get several different answers.
  • Typically, condo categories are 1 bedroom, 1 plus den, 2 bedroom, 2 plus den and your open concept studio spaces.

The truth is none of the typical condo sizes are appropriate for investment purposes.

When purchasing for an investment, you always should go for the smallest unit of a given type – say you want to go for a 1 bedroom plus den, you must always choose the smallest 1 bedroom + den.

  1. The smallest units appreciate at the fastest rate –

There is always a ceiling on the maximum amount a buyer will pay for a given unit type. So in turn when purchasing the smallest, cheapest unit – it will leave the most room for appreciation.

  1. The smallest units produce the best cash flow –

Rentals rates are primarily determined by unit type and not square footage, features/ finishes. Unit prices are determined by square feet, so in order to retain the best return on investment you should look into the purchase of the smallest and cheapest unit of a given type – studio, 1 bedroom or 2 bedroom with or without a den.

Take for example an 800 square foot 1 bedroom will not rent for very much more than a 600 square foot 1 bedroom. In terms of the cost of actually purchasing the unit, the difference is monumental. Therefore maintenance and property taxes will also be much higher as well.

Sticking to the script 

When purchasing under the terms ‘investment’, do not ever put yourself in the tenants shoes and start thinking ‘would I want to live here?” When you start to think for yourself, you start equating your preferences in terms of the overall management of the property, which realistically will not keep dollars in the bank.

Do not worry about the size of the unit and how your furniture and stuff would look inside of it, because the point of the investment is that it never will have to. Stick to the fundamentals and a low cost model and you will not regret your decision.

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