real estate investment

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.

Investing in a Toronto condo? Here's what you need to know.

tips for buying toronto investment condos

A little research goes a long way

As Toronto continues to rank in every Top 10 list for livable and desirable cities and detached single-family homes become less affordable for average families, more people’s thoughts turn to condominium ownership.

Many people think of condos as an investment: Whether they use it for an investment property from the beginning, or figure they’ll live in it for a couple of years and then rent it out when they move on to a larger place, condos are often a ‘gateway property’ to real estate investment.

And overall, Toronto condos do make sense. The city is growing, it’s desirable, and while no real estate market offers guarantees, it’s generally safe to assume that a condo in a desirable downtown Toronto building will retain and grow its value over time.

However, it’s important to remember that condominiums have unique characteristics that make ownership different than the four-walls-and-a-yard of single-family homes. They also come with specific rules, regulations and government legislation that can affect ownership, costs, and how well your unit can function as an investment property over time.

We’ve been managing Toronto condo units for investors for 20+ years now. Here’s what we think all potential condo owners should know before buying a unit they intend to use as an investment property.

 

Understand the market (for buyers and renters)

In the past few years, the number of Toronto condos purchased for investment purposes has risen significantly. And while there are plenty of potential tenants to go around, the best ones are market savvy, and have a good idea what a ‘fair’ rent looks like. Attracting and keeping good long-term tenants means pricing your unit competitively within your building or neighbourhood.

 

Read the condo rules carefully before signing on the dotted line

As the number of rental units as increased, so has concern on the part of condo owners about the rise of tenants in their buildings. Tenants are often seen as transient and less invested in the overall well-being of the condo building, and that makes resident owners worried about their property values.

In response, many buildings have added clauses about rental units to their condo rules. This may involve everything from minimum tenancies to access to elevators for moving in and out, and can limit your ability to rent your unit.  Just about all buildings, for example, prohibit renting your unit on a per-night/Airbnb-type model.  So before you sign anything, read the condo rules – and don’t skim!

 

New condos are most desirable to high-end renters

Generally speaking, if you’re looking to attract renters at the high end of the market ($3500+/month), you’ll want a new (less than 1 year old) condo. This is largely because new condos come with new appliances and newer floors, and prospective tenants feel like they can just move in without having to paint or change too much.

 

Older condos have the advantage of size

As most of us know, Toronto condos have gotten steadily smaller – the city of Toronto says the square footage has shrunk by more than 25%!

But this is where older condos have an advantage: There are plenty of tenants who would rather have room for a king-sized bed or more counter space than a Sub-Zero refrigerator. You’ll still need to update your condo every few years (we see more potential tenants really resisting even larger condos if they are fully carpeted, for example), but the potential for long-term tenants will likely make the investment worth it.

 

Understand your options regarding furnished and unfurnished suites

You may decide that you want to lease your suite as a regular, unfurnished apartment: Tenants sign a 1-year lease agreement, the situation is bound by the Landlord & Tenant Act, etc. And this can be a great option (though most investors discover that being a landlord isn’t quite as easy as they’d hoped).

Or you may decide to offer your unit as a furnished suite: The condo is fully furnished, right down to dishes and flatware, to be used primarily by shorter-term guests who may be in town for business or need a place to say for a month or two because their own home is being renovated or was damaged in some way.

Both of these options can be beneficial for investors: Unfurnished suites provide the predictability of a year-long lease; furnished suites tend to attract shorter-term tenants but at a higher monthly rate.

 

WANT TO KNOW MORE?

For more than 20 years, we’ve been helping Toronto condo investors get the most out of their properties, via both furnished and unfurnished suites. If you’re thinking of buying in the city, but aren’t sure what will make the most sense for you, get in touch – we’d love to help.

 

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!