condos

You bought a great investment condo. But do you really want to be a landlord?

Corporate housing manages condos for owners

 

Congratulations – you’ve just bought a condo as an investment in the super-hot Toronto market!  If you’re not in too much of a hurry (property fast-flipping can be risky), you’ve probably made a good investment, especially if you’ll have tenants to pay some or all of the mortgage costs.

Ah…tenants.  While you may come across the occasional tenant horror story, the truth is that most tenants – especially the kind of people who want to rent a new condo in downtown Toronto – are good people who won’t leave your unit with holes in the walls or broken toilets.  But even with great tenants, being a landlord can be a lot of work:  Advertising your property, arranging showings, doing credit checks, fixing faucets that always seem to break on a Sunday night – are you sure you’re ready to deal with that?

5 questions to ask yourself before deciding whether to be a landlord:

  1. How much free time do you have? The #1 complaint we hear from new landlords is “I didn’t realize it would take so much time!”  If you (and your spouse, if applicable) have demanding jobs and family commitments, the process of finding, selecting and managing tenants on a day-to-day basis could be a problem.  The irony of great tenants is that they’ll let you know every time anything goes wrong – and they’ll want you to take care of it quickly.
  2. How much experience with finding and assessing tenants do you have? One of the most common issues for new landlords is making tenant decisions based on a ‘gut feeling’. Sure, a gut feeling can help you make a decision, but it’s no substitute for conducting background, credit and reference checks.
  3. How ‘handy’ are you? Rental properties (even condos, and even new builds) always need upkeep.  Light switches, curtain rods, leaky windowpanes, malfunctioning dishwashers – something always needs attending to.  If you’re the sort of person who can fix a faucet without having to call a plumber, great.  If not – or if you have to make 14 calls to the condo management team in order to get something done – you may end up with more headaches than you realized.
  4. Do you live near your investment property? Do you spend significant time out of town? Being a landlord means you’re never really off-duty, because if a tenant calls on Christmas Eve to report their heating isn’t working, you have a duty to drop everything to find a solution. If your investment property isn’t within easy distance of your home, if you’re frequently out of town on business, or if you spend several weeks a year down south or at the cottage, the landlord lifestyle may not be for you.
  5. Are you good with paperwork? This is an important, but often overlooked, part of being a landlord.  You’ll need to keep good records – of tenant information, contact numbers, receipts and repair documentation, etc. – for tax and legal reasons.  If you’re the kind of person who just throws everything into a shoebox and hopes the accountant will sort it out later, being a landlord might not be for you.

What do you do if you don’t really want to be a landlord?

Hire a property manager.  Property managers find, assess and manage tenants; they deal with day-to-day management; they can deal with repairs and tenant requests and the paperwork.  What’s more, in Canada the management fee is tax deductible. You receive a direct deposit in your account every month, and monthly and year-end statements to give to your accountant.  It’s all the benefits of being a landlord, with almost none of the headaches.

Want to learn more about our property management and suite management services?  Click here.

What to know before your buy a pre-construction condo in Toronto

Today Living Group tips for buying condos

With the Toronto real estate market continuing to grow exponentially, more and more people are finding that condos – with their more accessible price points – make appealing investments. Whether these investors plan to live in the condo for a year or two, then rent it out when they move on to a larger space, or whether they buy the condo strictly for investment purposes, buyers need to know what they’re getting into, because condos can work a lot differently than the traditional ownership of a single family home.

Today, we’re going to look at what investors should know before they invest in a pre-construction condo. ‘Pre-construction’ generally means any time before a condo building is finished.

Pre-construction condos can often seem like good deals: Builders often offer pre-construction deals to early buyers; the deposit may be payable in small installments; and there’s often the promise of ‘customization’ that goes beyond just choosing the colour of your countertops.

But pre-construction condos also come with more risk than existing condos, because they simply don’t exist yet. And if you’re buying really early in the construction cycle, there may be nothing more than a big billboard and a sales center – the builders may not even have broken ground yet.

So how can you reduce the risk – and maximize the gain – of buying a pre-construction condo?

 

Research the developer

A big, established condo development company – the Tridels, Center Court, and Mintos, to name a few – is more likely to have the experience and capital to take a condominium project from zoning and permits right through to occupancy. Before you buy a pre-construction condo, do some research: Does the condo company have a good reputation? W/hat’s their history regarding construction delays, financing problems, zoning fights, etc.?

No condo developer will be perfect – construction delays happen to everyone – but a development company that has successfully weathered 10 or 20 years of condos is probably a better bet than with no track record.

 

Research the subcontractors

Big developers don’t do all the work themselves, of course – they hire subcontractors for specific parts of the project. It’s worth asking who those subcontractors are, and doing some research on them as well.

 

Location, location, location

In a hot real estate market like Toronto, it’s safe to assume that there aren’t a lot of ‘bad’ locations. But it’s worth noting that some locations are more appealing than others because of access to transit, entertainment or services, and that over time, the addition of a few condo buildings in an area previously dedicated to single-family residential homes will change the neighbourhood.

When you’re thinking about investing in a pre-construction condo – one that might not be move-in ready for another year or two – it’s worth doing some thinking about what the location is like now, and what else is going on in the neighbourhood that might change it by the time you take possession.

 

Get the measurements – and a tape measure

The more units a developer can put in a given building or on a piece of land, the more money they make. Blueprints and “artist’s renderings” can look beautiful, but many new condo buyers who bought pre-construction find, when they move in, that the place is smaller than they thought, or the fridge seems tiny or the oven won’t fit a holiday turkey.

If you’re new to condo buying, take some time to really understand the space you’re buying: Use a tape measure to map out your current appliances, bathroom, bedroom, etc. and map it against the plans for the new condo to get a feel for size.

 

Ask for the condo rules in writing

Condominium rules are not always the same: Some buildings allow pets, some allow pets under a certain size, and others are pet-free, for example.

Some buildings allow you to rent out your condo for as little as a month, while others prohibit renting your condo for anything less than 6 months or a year – and that will make a difference if you’re buying a condo with a view to making it an income property.

So before you sign any pre-construction paperwork, ask for a copy of the condo rules – and get them in writing, not just assurances from the person working in the sales office. (If they don’t have these rules ready to go in the pre-construction phase, that may be a red flag about the competence behind the project.)

Bottom line? The Toronto condo market is hot and is likely to continue to be – but that doesn’t mean that you shouldn’t do your due diligence when buying a pre-construction condo.

ASK THE EXPERT: Can I rent out my condo?

Today Living Group condo rentals

 

“I just bought a condo in Toronto for investment purposes, but now I hear I may not be able to rent it out. What are my options?”

Congratulations!  Buying a condo that can generate income for you now, and become an asset or retirement home for you later can be a terrific investment – if you’ve done your homework.

First, don’t rely on comments from neighbours, real estate agents you don’t know, or even that guy from the condo board you met in the lobby for accurate information about what you can and cannot do with your condo.

If you’re in any doubt about any aspect of how you can or can’t use your condo, your first step should be to re-read your condo agreement. Terms pertaining to the renting of units are found under the ‘Use of Units’ heading.

(If your condominium building isn’t brand-new, there may be a condo board in place which may have established additional rules about what you can do in and around your unit. These are unlikely to affect whether you can rent it out or not, but it’s a good idea to give them another read as well.)

 

You can’t be prohibited from renting your unit

No condo corporation in Ontario can prevent an owner from renting out their unit.

What they can do, however, is set minimum rental periods: In some buildings, rental periods may be no less than 30 days; in others, the rental periods may be no less than one year.

In some ways, these rules are a good idea: They promote stability in the building, and help ensure that you know who your neighbours are from one week to the next. They also reduce the chances that the unit next to you will become an Airbnb unit constantly occupied by a rotating cast of partying tourists.

 

So what are your options?

If your building requires that rental periods be no less than a year, you may choose to keep your suite unfurnished and rent it out in the traditional way.  Keep in mind renting the suite on your own can bring nightmares that you are not ready for.  Maintenance requests at all hours, problems with your tenant in the community, etc.     Today Living Group offers you a better option.  They have a team that will fully vet your tenant, ensure your tenant follows the community rules and regulations, take care of maintenance calls 24 hours and all while you enjoy time with your family, go on vacations, etc.

If your building allows rental periods of as little as 30 days, you have more options. You can go the long-term, unfurnished route – or you can consider offering a furnished unit as corporate housing (also known as ‘executive suites’).

Either way, you can choose to manage the process yourself, but as we’ve said before, this model is often a lot more work than people realize, especially if they’ve never been a landlord before.

For many owners of investment condos, the best option is to engage a property management company. They handle the attraction and vetting of tenants; they look after the collection of monies; and, probably most importantly, they’re the ones on call when something goes wrong, like a leaky faucet. A property management company will also deal with the condo board in the event one of your neighbours complained about a tenant in your unit.

Sure, we’re biased. But we also know that property management companies that specialize in corporate housing – both for short and longer-term stays – tend to work directly with employers looking for good-quality housing for their employees. That generally means better tenants, bills paid on time, and much less wear and tear on the unit (because the employees end up spending most of their time working anyway).

Want to know more? Don’t hesitate to get in touch.

 

Join us at the Real Estate Talk Show this week!

TLG President Michelle White joins Erin McCoy to discuss Real Estate Outlook 2015

Michelle White and Real Estate Talk Show

This Thursday, Today Living Group president Michelle White joins Erin McCoy and other leading Canadian real estate experts to discuss all things real estate. Whether you’re buying, selling, renovating, investing or just want to know what’s going on with real estate in Toronto, you should attend this event to get the inside scoop.

The incredible lineup of industry experts:

Industry experts at the Real Estate Talk Show Event

Just some of what the experts will cover:

  • Real Estate Market Update, Analysis & Forecast
  • Top Renovations that Add Value to Your Home
  • Real Estate Mistakes We Can Learn From
  • Investment Options for Active AND Passive Investors
  • and… They’ll Answer Your Questions!

WHEN

Thursday, May 28th
Wine & cheese: 6pm
Panel discussion: 7-9pm

WHERE

Mercedes Benz Downtown
761 Dundas Street East
Toronto, ON M5A 4N5

(Onsite parking is provided.)

There is no charge for this event, thanks to our sponsors, but seating is limited so please make sure to RSVP.

Click here to register.

We look forward to seeing you!