Are Toronto Condos Starting To Make Sense As Investments Again?

At some point the math will start making sense again.

The holidays are probably my favourite time of year for one reason and one reason only - I get to turn off my brain. Like, I'm talking "what day is it?" kind of detachment from reality that I so look forward to every year. The phone doesn't ring and it doesn't worry me. Nobody is emailing or texting me and that doesn't stress me out like it normally would (if my phone isn't buzzing 100 times a day, I usually get worried, haha). No showings lined up? That's quite alright with me! No guilt about not hustling or closing deals. Just pure relaxation. Until January 2nd. Then my brain flips back on like a light switch and the hustle start anew...

Have you guys been watching condo prices in Toronto lately? Of course you have. Who can resist? Prices have been on a slow grind downward literally every month for effectively 18 months now. Prices just can't seem to find a bottom but rather than a dramatic, sudden overall drop in prices, it feels like death-by-a-thousand-papercuts. Don't get me wrong - I have seen some very dramatic sales where the seller must have said "get me out. Now." But overall, the grind downward seems to be a calm and orderly slide with sellers who want/need to sell trying everything they can to find a buyer at a price that the sellers can stomach. And if all else fails, the rental market is holding up quite well in the core (despite what the media would have you think) so being a landlord isn't the worst option for a lot of sellers who aren't willing to sell at just any cost. That's been the saving grace for condo resale prices in my opinion. Rents are up in the core, so investor clients are able to hang on by renting out their units to buy themselves time until a better resale market finally arrives.

Which got me thinking about when Toronto condos will start making sense as investments again. For a very long time, investors didn't care about cashflow. In fact, it was next to impossible to break even on a condo investment with just 20% down. Even 30% down wasn't a guarantee. But investors didn't care. So what if you were out of pocket $400-$500/mo in cashflow? If your condo was going up 10%/year, it didn't matter. Price appreciation was the name of the game for probably the past 10-15 years. Cashflow wasn't the focus. But the focus has certainly shifted as price appreciation doesn't seem to be a guarantee anymore (at least in the near term).

For as long as I can remember, a typical cap rate for a downtown Toronto investment condo was around 3.5%. If you could get higher than 3.5%, you'd jump all over it. 4% was next to impossible. And a lot of investors were settling for closer to 3% just to ride the appreciation wave in a hot market. I wrote a blog post eight years ago talking about typical cap rates in Toronto and that post is extremely relevant today because as far as investments go, absolute price doesn't really matter. Your return does. It's also a good primer on cap rates in general. Check out -> Cap Rates Are Back! and my follow-up the year after -> Is Cash Flow All That Matters In An Investment Property?

So what cap rates are we seeing today for downtown Toronto condos? Well, let's take a look at a few real life examples and see if the math is mathing on investment condos again. Side note: Apparently I'm not allowed to publicly publish sale prices of exact units (don't ask me why) so rather than risk the wrath of the Toronto Real Estate Board, I'll get as close as I can in terms of address. The actual numbers below are all 100% real:

1 - #201x-158 Front St E - Sold for $450,000 on 11/14/2025. A perfect sub-500 sq ft 1-bedroom investment condo, in a great building and location. A perfect rental option. This exact layout was just leased for $2,200/mo. Here's the cap-rate math:

Sale price: $450,000

Rent: $2,200/mo

Condo fees: $366.04/mo

Taxes: $2,096.37/year (or $174.70/mo)

Insurance: ~$50/mo

Net per month: $1,609.26/mo

Annual cap rate: 4.29%

I haven't seen 4%+ cap rates in years!

2 - #100x-38 The Esplanade - Sold for $585,000 on 10/25/2025. I know these units very well and the identical unit had just rented for $2,675/mo:

Sale price: $585,000

Rent: $2,675/mo

Condo fees: $557.32/mo

Taxes: $3,159.63/year ($263.30/mo)

Insurance: ~$50/mo

Net per month: $1,804.38/mo

Annual cap rate: 3.7%

Not bad. But wait, it gets better.

3 - #63x-112 George St - Sold for $485,000 on 11/29/2025. At nearly 700 sq ft, this unit would easily rent for $2,450/mo.

Sale price: $485,000

Rent: $2,450/mo

Condo fees: $506.98/mo

Taxes: $2,903.23/year ($241.94/mo)

Insurance: ~$50/mo

Net per month: $1,651.08/mo

Annual Cap rate: 4.08%

Now we're talking!

4 - #43x-1030 King St W - Sold for $485,000 on 12/2/2025 . This was a really great deal for a 564 sq ft 1+den in a very solid, popular building. I could easily rent this out for $2,350/mo, no sweat.

Sale price: $485,000

Rent: $2,350/mo

Condo fees: $402.45/mo

Taxes: $2,549/year ($212.42/mo)

Insurance: ~$50/mo

Net per month: $1,685.13

Annual cap rate: 4.17%

I would 100% buy a place like this myself.

5 - #81x-9 Tecumseth St - Sold for $420,000 on 11/14/2025. Sub-500 sq ft 1-bedroom in a new building, which was the target 1-bedroom size for all those preconstruction condo buyers during the Toronto preconstruction boom of 2019-2021.

Sale price: $420,000

Rent: $2,200/mo

Condo fees: $495/mo

Taxes: $2,179.86/year ($181.65/mo)

Insurance: ~$50/mo

Net per month: $1,473.35/mo

Annual Cap rate: 4.2%

Here we go!

6 - #41x-38 Niagara St - Sold for $440,000 on 11/25/2025. A perfect investment property if there ever was one.

Sale price: $440,000

Rent: $2,250/mo

Condo fees: $416/mo

Taxes: $2,253.16 ($187.76/mo)

Insurance: ~$50/mo

Net per month: $1,596.24/mo

Annual Cap rate: 4.35%

Now that's a juicy yield!

One thing we have to remember when looking at these cap rates. The (effectively) risk-free rate on a 5 year GIC today is around 3.5%. So an investor with a ton of cash can get a 3.5% with the click of a button and not have to deal with the risk of tenants, repairs, maintenance, vacancies, and the potential for prices to fall further. But the flip-side to that is there is zero chance of appreciation with a GIC. And zero leverage possible. So while many people are talking about the death of Toronto condos as a viable investment, that negativity actually makes me happy. Things don't bottom until everything you hear is negative. When all hope is lost, and every YouTube video you see is talking about how the condo "boom" in Toronto is over and that nobody will buy condos ever again, that's when I would be buying. Math doesn't lie. And at some point, the math will start making sense again. And that time might very well be right now.

Have you checked out my previous blog posts?

If you have a comment, feel free to leave it below. And remember, if you haven't already, please "like" my Facebook page, follow me on Instagram and check back regularly!

Your Toronto condo lover,

Adil Dharssi

Sales Representative

Skybound Realty, Brokerage

Direct: 647-223-1679 (call/text)

Email: Adil@AdilKnowsCondos.com

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