The Real Estate Unicorn: Cash-Flow Positive in Downtown
Interested in a property in the heart of the Fashion District that guarantees up to $27,099 in yearly income? Scroll to the bottom of this article for more information about The Woodsworth – and how CONNECT’s VIP pricing can save you up to $98,362.
Fundamentally, there are two ways to make money when investing in real estate: through appreciation and through generating income.
Typically, the trade off has been higher appreciation for lower cash-flows as the properties with the best capitalization rates (i.e. the highest cash-flows) are usually in a stable or declining market.
Real estate investors in Toronto (or any other hot market) know that the returns from capital appreciation far exceeds cash-flow – and this becomes an attractive trap to fall into.
And that’s fine if you want to roll the dice and get a little money quick. But if you’re looking to build long-term sustainable wealth – the kind that funds your retirement and gives you the financial freedom you dream of – then cash-flow is crucial.
To fully understand why, we’re going to consider three perspectives: investing vs speculating, assets vs liabilities, and cash-flow vs appreciation.
Investing vs. Speculating
Benjamin Graham, the godfather of value investing and Warren Buffet’s mentor, defined investing as follows:
“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
By Graham’s definition, buying real estate based primarily for capital appreciation on the assumption that prices will go up is speculating.
That isn’t to say that you can’t make a lot of money speculating – because you can (and we have!). But keep those speculative bets on the smaller side and always be prepared that they won’t all work out.
Assets vs. Liabilities
The Investorpedia defines “asset” as:
“a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide a future benefit.”
But we prefer how Rich Dad Poor Dad’s Robert Kiyoskai sees it:
“Assets put money in your pocket, whether you work or not, and liabilities take money from your pocket.”
Hence a real estate investment that is not cash-flow positive is not an asset, but a liability.
Cash-flow vs. Capital Appreciation
Just chasing cash-flow or yields alone is not necessarily the answer.
Yields in growing markets like Toronto, where there is high population and job growth, will always be lower than in weaker markets, where investors require higher returns to offset other risks.
So why not just buy in weaker markets? Because those markets almost always have higher vacancy rates and are far less liquid. Meanwhile, vacancy rates in Toronto have been less than 1% for years and homes are selling in less than a week.
And finally, in those high yield markets, there is often a loss when selling because the appreciation has not been strong enough to cover the transaction costs and fees.
THE BIGGEST MYTH: You can’t be cash-flow positive in Toronto?
We hear this all the time but you 100% can be cash-flow positive in Downtown Toronto – and it’s our favorite type of investment to make.
In general, we believe the best way to do so is by investing in pre-construction condos because you are will be buying future real estate at today’s prices.
The Woodsworth condos in the Fashion District is a perfect example. It’s in the heart of Downtown, so there’s strong appreciation and no shortage of renters, and due to our exclusive relationship with the developer, we can offer you exclusive rights and prices.
YOU HAVE UNTIL SUNDAY TO SAVE UP TO $98,362
THIS IS YOUR FINAL CHANCE TO BUY AT VIP PRICES
CONNECT asset management has exclusive rights and prices for The Woodsworth at an average $1,182 PSF until this Sunday (April 14).
Starting Monday, there will be no more sales until construction begins in May – and the developer has told us that prices will be increasing to over $1,350 PSF, which is more on par for the neighbourhood.
Depending on the unit, that means you can purchase now for a discount of $50,830 to $98,362.
My real estate partner, Toronto broker Ryan Coyle, and I are personally investing in this property. This opportunity is so incredible because:
- Guaranteed positive cash-flow
Positive cash-flow Downtown is almost unheard of – and The Woodsworth developers are guaranteeing two year rentals from occupancy at $6 PSF.
- Amazing appreciation and rental growth
The Woodsworth’s location and amenities means demand will only continue to rise. We’re projecting up to 38.9% ROI in year one. (Check out our full financial breakdown).
And don’t forget that prices will be increasing by $150 PSF after this Sunday – that’s an appreciation of 18% in seven days!
- Incredible price for an incredible location
Located in the Fashion District, The Woodsworth is in the middle of the GTA’s most coveted piece of real estate. And you’re getting it for a steal at VIP prices of an average $1,182 PSF. In fact, we can compare The Woodsworth to other buildings in the area:
For more information about this incredible investment opportunity, please contact Ryan Coyle directly at:
Ryan P. Coyle
Broker & Real Estate Advisor