Condo Investment: Why Buying A Condo on a Higher Floor is Better?  (2024)

In any building the floors are built similar if not exactly the same, however, it is interesting to note that the rent for each floor tends to be different. More specifically, the higher you go in floor plans, the more rent you will have to pay. But have you ever wondered why is it so? The only substantial difference between units on the lower floor and the units on higher floors is the view. The view from the balcony of your apartments plays heavily into the price as well.

For a vast majority of buyers, it is pretty common to think that the higher they go, the better the view will be, which is absolutely true. Therefore the real estate industry has maintained a set of rules about this comparison. For example condos on the higher floors will naturally have more rent compared to others.

Investors who are buying the condo for reselling or renting also prefer the higher condos so that they can charge more rent or price for the rent. So the obvious demand in the market for higher-level condos automatically makes them costlier than lower floors ones.

Here are some other reasons why buying a condo on higher floor is better:

1. Higher is Better

While investing in pre-construction condos for sale Toronto by Tridel it is always better to choose apartments on higher floors. There is a very simple reason behind this, for example, a rate of $8.33 per floor per month for a median floor median makes a total of $100 per year. Getting an extra hundred dollars on your initial investment of $1000 means that you are getting a cap rate of 10% and this percentage is considered very good from an investment perspective.

2. Higher floors get higher rents

Studies have suggested that in any building when you go for higher floors, the rent automatically increases for the privileges. To keep this into perspective, imagine yourself living in a beautiful city, now with lower floor plans, all the views you are going to get from your balcony are of other people’s apartments that are on your level or some other distractions that will be blocking your whole view. However, as you go higher, your view will just get better and better. You can easily get a birds-eye view of the city and have a balcony overlooking your city’s best attractions. Now, who wouldn’t want that? Plus it also gives you the comfort of having fewer distractions.

You would be aware of this theory already that people are willing to pay more for better views. If you have ever stayed in a hotel that comes with a view you would have noticed that sea-facing rooms that are on higher floors automatically have a higher rent compared to others. Similarly, for condominiums, renters are ready to pay a higher price just for the views. It also depends on which direction the balcony is facing.

3. Higher condos get more resale value

From an investment perspective, higher condos are always better as they give the most return on the value. Investors are more interested in buying condos on a higher floor as they are aware of its demand in the market. This makes the condos even more demanding in the real estate industry which automatically affects their price.

4. 3 Bedrooms get the highest floor premium

The data suggest that the highest amount of premium is for 3 bedroom units. People who rent their 3 bedroom units noticed that the price of their units automatically went up by $54 per month for every floor up they went, which makes it $648 per year.

Consider the buyer paid only $1000 per floor plan, then this makes it an astonishing $64.8 cap rate.