Duke Tower Kitchener | 39 fl | completed

[tomh009]

Which is a damn shame, because the more outlandishly pricey these get, the higher rent in general gets here.

Do they?  I would have thought market conditions determine rent.

Right. So just looked on Kijiji, there is a 700 sq ft unit for rent for $1400 (plus parking), at Arrow Lofts, which is likely at least as nice as DTK will be.

So let's do some math. $1400 per month, from that one needs to pay maybe $300 in condo fees and $200 in property taxes for a net cash flow of $900. If you want a property management company to take care of the unit and the rentals, it's likely another $100 or so.  Annualizing those, it's $9,600 or $10,800 per year.

Now, given the $400K starting price for a 700 sq ft unit in DTK, that gives you a 2.4% or 2.7% return on your investment, assuming you have no additional maintenance costs (not a good assumption in the long term) and assuming you can achieve 100% occupancy. Clearly this is not a good investment as such, the only way this can make sense is if the property values continue to go up strongly. And I expect that's exactly what all the Toronto-based buyers are assuming.