When buying a condo, whether as a rental investment property or to live in yourself, there are so many choices to make. From choosing the location and amenities to whether to go with a pre-construction unit or a turnkey one, it can feel somewhat overwhelming to step into the condo housing market, especially for the first time.
But there is one decision that you likely won’t have realized is a significant one… What floor to buy your unit on.
While this decision ultimately comes down to personal preference, there are a few facts that can help you work through the decision process. We’ll cover a few of those here so that when do have to commit one way or the other, you know what you might look forward to.
As floors get higher, so does the market value… To a point
When buying a condo in a high rise it’s common practice to see a floor premium in the pricing structure. In the Toronto area this is generally $1000 per floor (but can be up to $2000 per floor based on size or if it’s a penthouse). This means that for each floor that you go up in the building, your price will go up by $1000-2000.
While this often translates to the ability to charge an increased rental rate for each higher floor, there is often a height cap to this increase.
In simple terms, once the condo is higher than the trees and other buildings around it- usually by the 15th floor- a renter likely isn’t going to pay more for each floor going up beyond that.
So, while you can charge a higher rent on floor 15 vs floor 10, you likely won’t see the same increase when renting out the 20th or 25th floor of the same building.
Pros of buying high:
- More likely to have an unobstructed view, especially over floor 15
- Opportunity to charge more rent
- Higher potential resale value
- High sense of security, windows can comfortably be left open
- No traffic noises
- Lower likelihood of having pets in the units around you
Cons of buying high:
- Higher initial purchase price
- The resale value may not offer as big of a profit margin as you think in relation to the floor premium
- The view doesn’t change much as you get higher than around the 15th floor
- Could be harder to find a buyer/renter willing to pay the floor premiums
- Have to wait for the elevator and the elevator can break down
- Hot air rises so the higher floors are warmer in the summer and need more AC to cool
Pros of buying low:
- Lower initial purchase price
- Easier to access the unit, no having to wait for the elevator
- No worries about a fear of heights
- Closer to ground floor amenities
- No tenants below you to force you to step quietly
- Ground floor units can come with better amenities like a garden terrace or BBQ area to offset the floor premiums of higher units
- Cooler in summer months
- Some buildings offer a different floorplan on lower units to increase uniqueness, in turn increasing resale value
Cons of buying low:
- Lower rent ability
- Lower resale value
- Can hear the neighbours above you (though this is true for every floor except the top one)
- No views
- Traffic and street sounds
- More likely to have pets in the units around you
- Less natural light gets in
- Could be a premium on ground floor units depending on amenities
- Less privacy as people might be able to see in your windows
Benefits to choosing a mid level floor:
- Lower/no floor premium
- Moderate view
- Happy medium
- Street noise is much lower than the lower levels
The best floor for a condo comes down to a simple question
When it comes to deciding what floor to buy your unit on, there are many factors to consider. If you’re going to live in the unit yourself, it really all comes down to personal preference. But if you’re going to rent it out or flip it as an investment property, the question really comes down to whether you think the return on your investment is going to be worth the higher initial purchase price.