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Investors who bought pre-construction condos in 2017 and 2018 are closing on those units now, in 2025 and 2026, at mortgage rates and rents that were never part of the original math. Many are finding that rent no longer covers the mortgage, condo fees, and property tax combined, sometimes by several hundred dollars a month. You generally have three paths from here: sell now and accept a loss, hold and cover the monthly gap, or refinance to improve the numbers. The right choice depends on your equity position, how long you can carry a shortfall, and whether you believe this building's rents and resale value will recover.
This is one of the most common situations I'm walking Toronto investors through right now, and it's worth understanding clearly before you decide anything.
If you bought pre-construction in Toronto during the 2017 to 2018 boom, you likely locked in a price based on rents and rates that looked nothing like today's. Construction takes years, and a lot has changed between your purchase agreement and your closing date.
More than half of investors in newly completed GTA condos are now losing money on their rental units once you account for the mortgage, condo fees, and property tax, according to recent market data. That has not happened at this scale before. Some buyers assumed they would assign their contract before ever closing, and the tax treatment on that kind of sale is different from what you owe once you actually close, but softer resale demand made assignments harder to sell, and a lot of that cohort ended up owning a completed unit instead of walking away earlier in the process.
The result is a wave of new owners carrying units that were underwritten on 2018 assumptions and are now operating in a 2026 market.
Here's a simplified, illustrative scenario to show how the gap adds up. Say you bought a unit for $650,000 in 2018 with a 20 percent deposit, paid in installments over construction, totaling $130,000. At closing, you need a mortgage on the remaining $520,000.
At a 5-year fixed rate of 4.2 percent amortized over 30 years, that works out to roughly $2,530 a month in principal and interest alone. Add condo fees in the $600 to $650 range and property tax near $340 a month, and your total carrying cost lands close to $3,490 a month.
If that unit rents for $2,850 a month, a realistic figure for a comparable unit in today's softer condo rental market, the shortfall runs about $640 a month, or more than $7,700 a year, before you factor in vacancy periods, maintenance, or a property manager.
Your own numbers will differ based on your purchase price, deposit structure, mortgage rate, amortization, and building fees. If your unit also appraised below your purchase price at closing, that adds a separate financing wrinkle worth understanding on its own. Run your specific numbers with your mortgage broker and accountant before you decide anything. This is general market information, not tax, legal, or financial advice.
Sell now. This crystallizes a loss but stops the monthly bleeding. Resale prices in many buildings from this vintage are down 14 to 20 percent from peak, so selling generally means accepting that loss on paper, and often in cash at closing once selling costs are factored in.
Hold and cover the gap. This can work if you have genuine capacity elsewhere in your finances to cover a few hundred dollars a month for an extended period, and you believe rents and resale values in that specific building will recover within a timeframe you can actually live with. It only makes sense with real numbers behind it, not just optimism that things will turn around.
Refinance. Some lenders will work with alternative structures, extended amortization, or blended terms to lower the monthly payment. Weaker rental income relative to the mortgage can complicate qualifying, so it's not automatic, but it's worth having a mortgage broker run your file before you assume it's off the table. It's also worth revisiting the broader debate between cash flow and appreciation as a wealth-building strategy before you commit to a long hold.
Every situation is different, and the only way to know for sure which of these three fits you is to run the actual numbers on your specific unit, mortgage, and financial picture, not the average investor's numbers.
How do I know if my Toronto condo has negative cash flow?
Add up your mortgage payment, condo fees, and property tax, then compare that total to what your unit is actually renting for right now, not what it rented for when you bought or what you assumed it would rent for. If your total carrying cost is higher than realistic current rent, you have negative cash flow, and it's worth checking sooner rather than later.
Should I sell my investment condo at a loss or hold it?
It depends on how much of a shortfall you can sustain, how much equity you have left after selling costs, and whether you believe rents and resale prices in that specific building will recover within a timeframe you're comfortable with. There's no universal right answer here, it comes down to your own financial runway.
Can I refinance a condo that's losing money every month?
Sometimes. Lenders look at your overall income and debt picture, not just the rental income from that one unit, so refinancing is possible for a lot of owners. Weaker rental income can make qualifying harder, so it's worth having a mortgage broker run your file before ruling it out.
What happens if I can't cover the shortfall and my closing is at risk?
Talk to your lawyer and lender well before your closing date. Missing a closing can expose you to a lawsuit from the builder for damages, so if you're worried about covering the mortgage, the priority is exploring your options, whether that's a sale, a refinance, or additional funds, as early as possible rather than waiting to see what happens.
Is this happening across all Toronto condo buildings, or just certain ones?
It's concentrated in buildings that were sold during the 2017 to 2020 pre-construction boom and are only completing now, since those units were priced and financed under very different rate and rent assumptions. Units bought more recently, closer to today's rates and rents, are less likely to be affected the same way.
If your Toronto condo closed this year and the numbers don't work the way they did on paper back in 2018, you're not alone, and you have real options. This is exactly the kind of situation I walk investors through before they decide anything, because the right call depends entirely on your specific numbers, not the average. If you're facing this on your own unit, I'm happy to walk through the numbers with you. Reach out anytime at ryan@connect.ca, or send your details through this form and we'll get back to you.
About Ryan Coyle
Ryan Coyle is a Toronto real estate broker and investor with more than 20 years in the industry and over $2 billion in real estate transactions. He personally holds a portfolio of 40+ doors and helps buyers, sellers, and investors build long-term wealth through Toronto real estate. Ryan leads Connect, a full-service GTA brokerage focused on the downtown core and north Toronto's luxury market. Learn more at connect.ca.
