Feeling Positive About Negative Cash Flow


Having been in the Toronto real estate industry for two decades, clients often voice concerns about obtaining a positive cash flow on their property. A recent report by CIBC stated that 44% of Toronto Condos have a negative carry, meaning the inward cash flow on a property—the money received from rent—does not cover the cost of mortgage and condo fees at the end of each month.

Losing money each month? Isn’t that a bad investment?

Quite the contrary; if you know what you’re doing, negative carry is hardly a concern.

When you’re looking at a market such as the Greater Toronto Area (where appreciation in certain areas were as high as 50% last year), a small amount of negative cash flow is hardly a reason to worry. At the end of the day, your ROI from the appreciation of your property is going to completely surpass any kind of losses you incur from negative cash flow.

Determine Your Goals: Do You Want to Maximize Long-Term Returns or Increase Short-Term Cash Flow?

In a city such as Toronto, where housing prices are relatively high, you’re going to have more of a challenge finding a property with a positive cash flow. If money is tight and your goal is short-term cash flow, you’re better off finding a cash positive real estate investment in a low-cost city outside of Toronto. However, you won’t see anything near the appreciation values that you will on a property in Toronto.

If your ultimate goal is long-term return on investment, you’d be crazy to forgo purchasing a property with high potential appreciation in favour of a property that’s likely to be cash flow positive.

ROI on Cash Flow vs Appreciation

Here’s an example with some very conservative estimates. Let’s say after paying mortgage and maintenance fees, you’re clearing $500 a month of net rental income, which is $6000 a year. Seems pretty good at first! 

But when you compare the numbers to a property in Toronto that generally start in the $400k+ range and appreciates at 5% a year (which is a very common appreciation rate seen for decades in Canadian real estate), those $6000 per year returns suddenly don’t look so hot.

Hypothetical $400,000 Condo Investment

Cash Flow Income

$500 per Month x 12 Months = $6000 Per Year = 42 Years to Earn $100k

Appreciation Income

$400,000 x 5% Appreciation = $20,000 Per Year = 5 Years to Earn $100k

Compared to a condo that appreciates $100,000 in 5 years, you’ll need 42 years of rental income to match those returns!

Furthermore, if you look at the appreciation of Condos in the past 5 years in Toronto, you can expect a lot more than just 5% appreciation per year!

Negative Cash Flow isn’t the End of the World… But that Doesn’t Mean You Shouldn’t Aim High

Even in an expensive market like Toronto, cash flow is still something we help our clients aim for. At CONNECT asset management, we leverage our relationships to give clients early access to amazing properties at great prices.

By working with a company like CONNECT, you’re buying at a lower price and are positioned to get a better amount of cash flow on your condo investment. Additionally, we know the market very well, and we’ll happily point you in the right direction to help you achieve your personal goals.

The best part? We offer free property management for the first year on many of our properties, which again means better monthly income on your rental (we even offer rental guarantees on some properties).

Over half of condo owners are in a positive cash flow state—and that’s where we like to see our clients. Contact us today to learn how we can maximize your returns!

If you have any questions, please don’t hesitate to contact me! I’m always happy to help. 


Ryan P. Coyle
Broker & Real Estate Advisor
Email: [email protected]
Phone: 416.904.0664


Pre-Construction | Investments | Assignments | Resale

When it comes to purchasing property in the Toronto, Ryan Coyle is an expert. Ryan is a Broker with The Condo Store in Toronto and has been in the real estate industry for over 10 years, acting as a Broker since 2004. His combination of experience and passion bring success to his clients on an ongoing basis. You can see his website here.