The Condo Investor Mentality

CondominiumsIf you want to know how condo investors operate, CMHC has a new report for that.

It just released its 2015 Condominium Owners Survey (COS), and it’s stuffed with facts and insights on income property activity.

One key stat, for example, is the number of condo flippers (buyers who “anticipate holding their unit for less than 2 years”). CMHC estimates the number at just 8% of all condo investors. That’s markedly less than some housing bears would have us believe (which is exactly why hard data is so important; thank you, CMHC).

Below are some of the other mortgage-related highlights.

Propensity to Finance

  • 53% of condo investors put a mortgage on their last purchased unit
    • That compares to 59% of all homeowners, per StatsCan
  • About 20% paid cash
    • Versus 11% for all homebuyers, says Mortgage Professionals Canada


Down Payments

  • 20% of investors put down less than 20%
    • Since most lenders only lend up to 80% loan-to-value on rentals, most of these investors likely chose non-prime lenders, bought in a partnership and/or just flat-out lied (i.e., told the lender they’re buying an owner-occupied or second home property, which is fraud)
  • 45% had a down payment of 20%+


Term Selection

  • Most condo investors (53%) took the faithful 5-year term
  • Interestingly, 18% took a term over five years
    • That’s almost 4 times the ratio of all homebuyers combined
    • Given how high 7- and 10-year fixed rates are, this goes to show how some investors value consistent cash flow over upfront interest savings
    • This stat is also partly explained by the fact that 60% plan to hold their investment condo more than five years
  • Just 5% took a 1-year term or less



  • 12% of investors who mortgaged their last condo chose an amortization period more than 25 years
  • 42% took a 25-year amortization
  • 31% went with less than 25 years


Rate Choice

  • 37% took a variable rate mortgage
  • 45% picked a fixed rate
    • Compare that to the general population of recent homebuyers, where 3 out of 4 chose a fixed rate
    • Investors overall are clearly more comfortable with rate risk
  • 12% chose a fixed and variable rate (i.e., a hybrid mortgage. This 12% is double the average for all Canadian homeowners.)


If you want all the details on this study, read more on CMHC’s website.

  1. Rob, thanks for info, this is actually valuable, facts are always better than stories. One caveat, very few people would like to categorize themselves as self declared flippers for many reasons. I think 8% is low but I don’t think it is anymore than 12% to 15% Not the very high numbers we hear from the housing bears.

  2. Thanks Ron. CMHC asked investors if they plan to hold less than 2 years. It’s hard to say how many people answered honestly but I agree with you, it could be a bit more than 8%.

  3. Imagine that. Canadian real estate investors are largely a careful, cautious and conservative lot. I’m in the ‘hybrid’ mortgage category myself. Kind of like fence-sitting. Such a reckless dare-devil.

    P.S. Great info. Rob.

  4. Thanks Rob, this article is very informative.

    What I see, and what is not revealed in these numbers, is the cash investors buying multiple units. Say 7 units in one building, 5 units in the other and in yet another bought 9 units, so when he/she gets a call gets a call from the developer for the next installment the answer is “which company are you?” True story by the way, someone I know was at this conversation. By the way these people hold for longer than 2 years in some cases. This will skew these numbers quite a bit, would you not agree?

    Lets say that about 20% paid cash as in these findings, and if each averaged just 5 units then that would put 8% of the condos bought today as investor or “flip” properties.

    Below is the calculation:

    (investors = 8% x 0.20 = 1.6% total cash investors x 5 units = 8% of the units are flip properties with investors selling in less than 2 years.)

    As for flippers of 2.1 years + and buy and hold hot foreign money, those numbers are not in front of us to calculate here, so it is anyone’s guess. Conservatively we could say the number is more.

    Presumably CMHC did this study across the whole of Canada, so the numbers would be more concentrated in Vancouver and Toronto, would you agree?


    1. Hi Tom, Thanks for the note. Let’s dive into this more. Which specific stat(s) do you feel might not reflect reality?

      From the data CMHC provided, it’s tough to draw conclusions about any negative effects of multi-unit flippers. Reason being, we can’t assume that cash buyers generally want to flip. Nor can it be assumed that a significant number of cash buyers purchase 5+ unit. We just don’t have those numbers.

      Here is some additional data specifics from CMHC:

      * 9.6% of investors own three or more secondary condo units
      * 19.4% bought cash
      * 2.2% of their local units were bought pre-sale
      * 4.1% of units are vacant (of which 30.7% of those investors plan to sell in less than 2 years)
      * 8.4% plan to hold the last investment condo they bought for less than 2 years

  5. Thanks Robert,

    This can get complicated in terms of calculation, but really intriguing topic. I wonder how they get the vacancy rate, it would be interesting to see the percentage of units that pay less than $12 per month in electricity bills over a certain period.

    Best to you!


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