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It’s Good to be a Landlord Right Now

[Renters are lining up to pay $2700/month for a view like this.]

Landlords and would-be landlords take note: the sky is not falling and it is not a bad time to be a landlord in this city. I’ve been watching the rental market more closely than ever these past few months and I’ve noticed some very surprising trends. Rents are going up, and going up much faster than anyone in the mainstream media (those who are trumpeting an impending market crash) would like to admit.

Here are two recent case studies that illustrate the current rental market environment:

1. Some clients of mine who are currently living and working in the U.K. but want to move back to Toronto in a year bought a 2 bedroom semi in Cabbagetown for around $600K. Their plan is to keep their foot in the Toronto real estate market and when they move back, renovate and move into the property. When they took possession of the property, they inherited the tenants who were paying $1900/month. The tenants are set to move out next month. They advertised the property for rent and after the first two showings they had two offers to rent from highly qualified and professional tenants. They ended up taking slightly less than they could have in order to get the tenants they wanted. The property will be rented at $2450/month with the tenant paying the gas and hydro bills. That’s an increase of 28% in rent from the previous tenant! The owners are enjoying break even cash flow with just 20% down.
2. New condo buildings are especially interesting. They are commanding rents never imagined just a year ago. For example, at M5V (375 King), you can get a great example of how rents have been creeping up significantly over just the last few months! If you take the example of a 852 sq ft 2 bedroom unit with parking, they were renting out for $2500 in October, $2600 in November, and $2700 in December! An astonishing increase of 8% in less than 3 months. $2700/month works out to $3.16 per square foot. The $3PSF barrier was until recently usually reserved for Yorkville properties and a few other select buildings downtown only. A studio just rented out at M5V for $1500/month and it was only on the market for 2 days! Prime downtown studios were fetching a max of about $1300/month just a year ago.

The point of this post is to illustrate anecdotally that rents are going up and going up fast for downtown properties, especially condos in brand new buildings on high floors. This is food for thought to the crowd that says the prices like $650-$700 per square foot for pre-construction condos are completely unsustainable because they will never carry themselves with 20-25% down. Three or four years from now do you think rents will be higher or lower than they are today?

If you are ready to take the plunge and become a landlord, or if you are a landlord but would like to learn about how you can maximize your returns in the current market, please contact me.

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Festival Tower Update: Units Starting to Move

My last blog post I wrote about the Absorption Rates of various downtown condos got a lot of attention and even inspired my friend John Pasalis from MoveSmartly.com to write a great post about the condo market. The issue I wrote about was the fact that some condos, like Festival Tower for example, are loaded with listings for sale but units are not actually selling. It’s been nearly 2 months since then and I thought it was time for an update.

The good news is that after nearly 3 months of no sales, there have been a couple sales at Festival Tower in the last week. A 1 bedroom + den with no parking sold for $435K (approximately $693 per square foot), but the sale that really got my attention was a studio that just went for $365K. To my knowledge, this represents the highest selling price for a studio apartment in the city over the past year, and possibly EVER (for resales, not pre-construction). At this price the buyer paid approximately $750 per square foot. Very impressive and shows that studio apartments can sometimes be fantastic investments as these units were originally selling in the mid $500s per square foot.

In addition, there are currently 3 units that are all sold conditionally (meaning they will likely be sold firm soon). All 3 are in the $414K-$452K range and all are 1 bed/1 bath units. Once these sales start to go through, values will pretty much be set in the building and the dominoes should start to fall. I will continue to watch with intrigue to see where values go in this building over the 6 months.

The big question is still this: will Festival Tower command a premium over other newly completed (or about to be completed) buildings in the area? The few sales we have seen so far seem to indicate that there will be a premium, but how much will that premium be exactly is still unknown.

Questions or comments? Please contact me any time.

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5/5/5: 5 Units Under $500K Available for Purchase with only 5% Deposit

December 7th update: After posting this last first last Thursday, nearly every single unit has been sold. One great unit still remains, contact me for details.

Recently I have been encouraging my clients to see past the hype of the latest flavour-of-the-month condo projects and consider buying at existing new developments that may be as much as 80-90% sold out. Some of these are offering excellent value compared to their newly launched competitors.

Common wisdom says that the best time to buy a new condo is always at the VIP stage – the earliest possible point where prices will always be lowest.  This is usually true, but when a developer sees a lineup outside his sales centre that is 2 blocks long before he opens his doors, rest assured he is going to tell his sales department to raise the prices because they are obviously not charging enough! The end result is many buyers who buy at these VIP events are shocked when they compare the price they paid with the price they thought they were going to pay based on pre-VIP sale advertised price points.

Here are 5 units that are currently available for purchase with only 5% total deposit at two great developments at King and Spadina – M5V and Victory, and one in Liberty Village – Liberty Market Lofts. This is a true 5% down, with nothing further due at occupancy.*

1. M5V Condominiums – “M17″ unit, 721 Sq Ft, 1+den, 29th floor, $442K
2. M5V Condominiums – “M30″ unit, 852 Sq Ft, 2 bed, 26th floor, $502K
3. M5V Condominiums – “M23A” unit, 763 Sq Ft, 2 bed, 30th floor, $471K
4. Victory Condominiums – “Darling A” unit, 765 Sq Ft, 2 bed, 11th floor, $405K
5. Liberty Market Lofts – 885 Sq Ft, 1+den, 5th floor, $385K

*Disclaimer: Limited time offer. Prices and conditions subject to change at any time. Information is deemed to be accurate but TrueCondos.com and Andrew la Fleur do not guarantee accuracy. Some conditions apply. Contact me for details.

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5% Deposit Available at Liberty Market Lofts, Victory Condos, & M5V

This week I’m excited to announce an excellent investment/purchasing opportunity available exclusively for my clients at Liberty Market Lofts, Victory Condos, and M5V.

For a limited time, my clients have the ability to purchase select suites at these three highly successful downtown developments with only 5% total deposit. Normally the deposit structure would be 15% + 5% at occupancy.

The suites that qualify at Victory and Liberty Market Lofts are all the remaining 2 bedroom units. At M5V, the suites that qualify are all remaining units priced over $600K.

This offer is not available to the general public, and this offer is not available to general agents and brokers. This is a one-time perk that my clients can enjoy with these developments because I am a member of the “Platinum Agent” club for Lifetime Developments, BLVD Developments and TAS DesignBuild.

Please contact me asap if you are interested in purchasing a unit at one of these projects. This is a very limited and exclusive offer-don’t delay!

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