Search
Generic filters
Filter by Categories
All Condos
Ask Andrew
Hi-Rise (West) Inc.
Insights
New Condos by City
Ajax
Aurora
Barrie
Beamsville
Bolton
Bracebridge
Bradford
Brampton
Burlington
Caledon
Calgary
Collingwood
Dundalk
Halton Hills
Hamilton
Kingston
Kitchener
London
Markham
Thornhill
Milton
Mississauga
Cooksville
Port Credit
Square One
Montreal
Napanee
Newmarket
Niagara Falls
Oakville
Oshawa
Ottawa
Pickering
Richmond Hill
Smithville
Stayner
The Blue Mountains
Toronto
Amesbury
Baldwin Village
Bayview Village
Beaches
Bedford Park
Briar Hill
Brockton Village
Cabbagetown
Canary District
Casa Loma
Chinatown
Church & Carlton
Church & Wellesley
Church St. Corridor
Clanton Park
Corktown
Corso Italia
Danforth Village
Davenport
Davisville Village
Distillery District
Don Mills
Downsview
Downtown
East Junction
East York
Eglinton East
Eglinton West
Entertainment District
Eringate
Etobicoke
Fashion District
Financial District
Flemingdon Park
Forest Hill
Garden District
Greektown
Harbourfront
High Park
Kensington Market
King East
King West
Leaside
Leslieville
Liberty Village
Little Italy
Little Portugal
Long Branch
Mimico
Moss Park
Newtonbrook
North York
Oakridge
Old Town
Ottawa
Parkdale
Regent Park
River District
Rosedale
Rustic
Scarborough
St. Clair West
St. James Town
St. Lawrence
Stockyards
Summerhill
Swansea
Tam O'Shanter-Sullivan
The Annex
The Junction
The Kingsway
The Queensway
Victoria Park Village
Wallace Emerson
Waterfront
Weston
Willowdale
Yonge & Bloor
Yonge and College
Yonge and Dundas
Yonge and Eglinton
Yonge and Lawrence
Yonge and Richmond
Yonge and Sheppard
Yonge and St. Clair
Yorkdale
Yorkville
Vaughan
Maple
Thornhill
Waterloo
Whitby
Whitchurch-Stouffville
Whitechurch-Stouffville
New Condos by Deposit
10% Before Occupancy
15% Before Occupany
5% Before Occupancy
New Condos by Developer
Acorn Developments
Adi Development Group
Allegra Homes
Alterra Developments
Altree Developments
Amacon
Amexon Development
Andrin Homes
Angil Development
Aoyuan International
Aragon Properties Ltd
Armour Heights Developments
Artlife Developments
Ashcroft Homes
Aspen Ridge Homes
Balder Corporation
Ballymore Homes
Bazis Inc
Benvenuto Group
Biddington Homes
Blackdoor Development Company
Block Developments
Bloomfield Homes
Branthaven Homes
Briarwood Development Group
Brixen Developments
Broccolini
Brookfield Residential
BSäR
Camrost-Felcorp
Canderel Residential
Capital Developments
Carlyle Communities
Carriage Gate Homes
Carttera Private Equities
Castlebridge Development Group
Castleview Developments
CentreCourt
Centrestone Urban Developments Inc
Centreville Homes
Chestnut Hill Developments
Choice Properties REIT
Choo Communities
Cityscape Development Corporation
Cityzen
Clifton Blake
Collecdev
Concert Properties
Concord Adex
Condoman Developments Inc
Conservatory Group
Constantine Enterprises Inc.
Consulate Development Group
Context
Core Development Group
Cortel Group
Craft Development
Creek Village Inc.
Cresford Developments
Crown Communities
Crystal Homes
Cystal Glen Homes
Daniels
Davpart
DC&F Corp
Devron
Diamante Development
Diamond Kilmer Developments
Diamondcorp
Distrikt Developments
Doornekamp Construction Ltd
Dormer Homes
Downing Street Group
Dundee Kilmer
Eden Oak
Edenshaw
ELAD Canada
EllisDon Capital
Emblem Developments
Empire Communities
Evans Planning Inc
Fernbrook Homes
Fieldgate Urban
Fifth Avenue Homes
First Avenue Properties
First Capital
Flato Developments
Forest Hill Homes
FRAM + Slokker
Freed
G Group Developments
Gairloch
Gary Silverberg
Gemterra Developments Corporation
Genesis Homes
Georgian International
Globizen Developments
Gordon Wells Ltd.
Graywood
Great Gulf
Greatwise Developments
Greenfield Quality Builders
Greenland Group
Greenpark Group
Greenwin
Greybrook Realty
H&W Developments
Harhay Developments
Harlo Capital
Haven Developments
Homes by DeSantis
Hullmark
Hyde Park Homes
Icon Homes
IN8 Developments
Investissement SM Immobilier
JCF Capital
Kaleido Corporation
Kalovida Canada Inc
Kaneff Corporation
KBIJ Corporation
Kingdom Development
KingSett Capital
Kroonenberg Group
Lalu Canada
Lamb Developments
Lancaster Homes
Lanterra
Latch Developments
Laurier Homes
LCH Developments
Les Entreprises QMD
Liberty Development
Liberty Hamlet Inc
Lifestyle Custom Homes
Lifetime Developments
Limen
LJM Developments
Madison Group
Malibu Investments
Manorgate Homes
Marlin Spring Developments
Marydel Homes
Mattamy Homes
Medallion Capital Group
Menkes
Metropia
Metroview
Minto
Mizrahi Developments
MOD Developments
Nascent Developments
New Horizon Development Group
NOCO Development Company
Norstar Group of Companies
North American Development Group
North Drive
North Edge Properties
Northam Realty Advisors
Nova Ridge Development Partners
Old Stonehenge
ONE Properties
One Urban
Options Development
Oxford Properties
Parallax Development Corporation
Patry Inc Developments
Pemberton Group
Phantom
Phelps Homes
Pinnacle International
Platinum Vista
Plaza
Podium Developments
Primont Homes
ProWinko
QuadReal
Queensgate Homes
RAJACan Developments Inc.
ReBuilt Construction
Reids Heritage Homes
Reserve
RioCan
Rise Developments
Riverking Developments
Rosehaven Homes
Rosewater Developments
Rowntree Enterprises
Royalpark Homes
Royalton Homes
Saxon Developments
Scholar Properties Ltd
Sequoia Grove Homes
Seven Numbers Development
Sherwood Homes
Shiplake Properties Limited
Sierra Building Group
SilverCreek Communities
Slate
Solmar Development Group
Solotex Corporation
St. Regis Homes
St. Thomas Developments
State Building Group
Sundance Homes
Sunny Communities
TAS
Tercot Communities
The Remington Group
The Rockport Group
The Rose Corporation
The Sher Corporation
Tiffany Park Homes
Time Group Corp.
Treasure Hill
Tribute Communities
Tricar
Tricon Developments
Tridel
Triumphant Group
Trolleybus Urban Development Inc
Trulife Developments
United Lands
UrbanCapital
Urbane Communities
VANDYK
VanMar Developments
Vermilion Developments
Vintage Park Homes
Wabash Heights Developments Inc
Westbank Corp
Westbank Corp. and Allied Properties
Westdale
Zancor Homes
New Condos by Occupancy Year
2019
2020
2021
2022
2023
2024
TBA
News
Podcast
True Condos Approved
Uncategorized
Videos
Filter by content type
Taxonomy terms

Will I be Able to Rent Out My Condo?

Podcast Featured Image 53

One of the most common questions that I get asked from first time condo investors is will I be able to rent out my condo once it is complete? In this episode I look at the latest numbers from Urbanation on the Toronto Condo rental market from Q2-2015. The bottom line is that the condo rental market in Toronto continues to have superhuman strength and investors have nothing to worry about at all.

Click Here for Episode Transcript

One of the most common questions that I get asked, and it’s often by first time condo investors, is will I be able to rent out my condo? I think this reflects an underlying fear that a lot of first time investors especially have, that they’re going to be stuck with a condo that they can’t rent out. They’re going to be paying expenses every single month, and they’re not going to be having any revenue or income coming in. Obviously, this is a worst case scenario. This is a terrible situation for any real estate investor to be in, and it’s not something that you ever want to be in for more than a very short period of time; a couple of weeks or a couple of months at the most.

I always find it to be a bit of a strange question, though, given the strength of the Toronto rental market. Maybe it’s just because I take for granted the strength of the market because I have been in the condo game for a long time. I’ve been an investor for a long time, but I always found it to be a bit puzzling that people would think that they’re going to be stuck with these condos and you’re not going to be able to rent it out. The answer is yes, absolutely you will be able to rent out your condo when it’s finished. Pretty much any condo anywhere in the city of Toronto, you will be able to rent out that condo. It just comes down to a question of the price and of the amount of time that it’s going to take to rent out that condo, but absolutely, you are going to be able to rent out your condo.

The reality is it’s probably going to rent out very quickly and for a very good price, especially if you’re one of my clients; if you’ve been listening to my podcasts, you’ve been reading my emails and blog posts, and if you’re following up my advice and buying in the right buildings and the right locations, and most importantly, if you’re buying the right units. I want to talk a little bit more in this podcast about the rental market in general, and again, just to remind you, especially the first time investor, that the rental market in Toronto is very strong. It’s something that I like to say, is that the rental market in Toronto has super-human strength. It’s almost like the super-hero of the condo industry in the sense the condo market is; how strong this rental market really is, and it’s a great boon for us as investors to be able to purchase units in a marketplace like Toronto, where the rental market is very, very strong.

Interestingly enough, this week, Urbanation, the stats and tracking company that tracks the condo market, they came up with their latest set of data and it’s the Q2 Rental Market Report, so that’s for the second quarter of this year, 2015. Depending on when you’re listening to this podcast, it’s either highly relevant or it’s old news, but either way, I think you can learn something from this podcast today, so the highlights from the report were as follows: There’s a 22% increase over 2014, in terms of the number of units that were rented out in Toronto. They tracked over 8,200 condos that were rented in the second quarter; 22% increase over 2014. Keep in mind, 2014 itself was a record, so we’re seeing this trend ongoing, where more and more units are being leased out. The rental market is growing in size; it’s getting bigger and bigger, and this is a reflection, I think, of more and more people moving into the city, and more and more people wanting to live in condominiums, as opposed to other forms of housing.

The other very interesting thing is that the demand is greater than the supply, so again, this goes to the question of will I be able to rent out my condo? Is the rental market strong? What’s going to happen when I go out and I need to find a tenant? There’s a lot of fear around that, but again, one thing I always tell people is look, the demand is greater than the supply. Regardless of what people have told you, or what your aunt or your cousin and your Uncle Frank or whoever said that there’s too many condos going up in Toronto, it’s completely untrue. Just look at the statistics; the numbers don’t lie. The demand is greater than the supply.

How do we know this is true? Well, there’s a few ways of looking at the numbers, but the most basic way of understanding why the demand is greater than the supply, is to go back to Economics 101 and realize that in the basic equation of demand and supply, if prices are increasing, that means the demand is greater than the supply. It’s really quite that simple, so yes, prices continue to increase. Urbanation has reported … This was a very interesting number that jumped out at me … 4.6% increase in the index rental rate for Toronto at $2.48 per square foot, which is a new record high for the average rental price. By the way, per square foot rental price is really the only price you want to look at. The end price for a unit is really not as relevant or as interesting as the rental price per square foot, when you’re trying to understand the market and the direction of the market, and whether the market is growing or contracting.

The good news is once again, rental rates are increasing. 4.6% may not sound like a very big number to you, but it is a very big number when you think about if your rents are increasing at that rate every year; that’s a very healthy increase that’s going to really pad your bottom line as a real estate investor. I don’t expect that trend to continue. Over the last five quarters or so, the number has been more like 1 to 2%, but I’d be very interested to see if it does. That’s certainly a great sign, but I’d consider it more of an outlier most likely, but we’ll see if that trend continues at 4.6%. We’ll see what the numbers come out with in Q3 a few months from now, when the numbers are released for that, but that is nevertheless, it’s good news to continue to see rental rates increasing, demand being greater than supply.

Another number to talk about that, the number of leases to the number of listings ratio: It was 74% last year and this year, it’s 79%. Again, when that number goes up… The lease to listings ratio … That means, again, that demand is greater than supply. We’re seeing more units being rented out than new units are coming available to be leased, so that is again, a very good sign for the rental market, and speaking to the strength of the rental market.

Next point: New buildings. Let’s talk about new buildings. There’s been some press and some blogs I’ve read here and there lately; people talking about how new buildings, when they come out, there’s a whole flood of new listings for rent and there’s a glut. People start throwing around words like glut of inventory in new buildings and this and that, or stories of people under-pricing; investors under-pricing each other within a building just to get their units rented out when the building’s brand new. I’m not here to say that doesn’t happen; certainly, that does happen. I’m not here to say that there aren’t a lot of new buildings lately where you’re seeing a large number of units all coming out for rent at the same time. That is certainly true, but the assumption here, the insinuation from the skeptics on the market is that this sort of thing is a bad thing; it’s a problem to have a unit for lease in a new building.

Well, I would venture to say no, that’s not true, and one number that really speaks to that is the fact that the lease to listing ratio for new buildings was 90%, so newly finished, newly occupied and registered buildings, as per Urbanation, the lease to listing ratio was 90%, as opposed to again, the market number overall of 74%, so obviously, again … It’s something I talk about a lot … Is the fact that condos are commodities; therefore, as an investor, it’s always best to be in the newest building and to own the newest building. That is going to be the most in demand; that is going to be the building that the most number of people are going to be interested in renting. Everybody wants to be in the newest, latest, greatest thing when it comes to a commodity like condominiums, so again, to be in a new building is not a disadvantage. It is definitely an advantage and yes, there may be some moments … Very brief moments of insanity, with some investors dropping their prices just to get these units leased out as quick as possible, but that period of time lasts just a matter of a couple of months, and then the buildings will normalize.

The following year, when the building is fully occupied, instead of having a hundred units available for lease, there’s only eight or ten, then the rental rates will rise significantly. We see this time and time again, so more on that perhaps in another episode: The strategy around renting out your unit in a brand new building and what to do after the first year and so on. We’ll probably talk more about that in another episode, but that’s just one point I wanted to make there; that having a unit in a new building is not a disadvantage at all. I would definitely say it is an advantage, and it’s where you want to be as an investor.

Finally, just to finish it all off with the summary points: Something I say a lot is if the condo market was going to crash, it would have already happened. If it was going to crash any time in the last decade, I would say 2014 was really the year for it to happen. We saw a record number of completions in 2014 come onto the market, be added to the inventory of available units, and how did the market respond to all this new inventory? Well, it responded in kind and even more so, as we’ve seen. The demand is greater than the supply; on the rental side, absolutely.

When we look at the resale market, we’re seeing the same thing, as opposed to renting, when we look at the sales side of it in the completed buildings, resales prices again are also up every month this year. They’re up, they’re up, they’re up; the story continues to move forward and the skeptics continue to be left behind, and the people who are getting into the market now are making a really great decision for the future, and things are looking great. This is a great time to get into the market. Things are not rising at a crazy unsustainable pace at all, so the market is very strong. Things are looking great, and it’s a great time to be a condo investor in Toronto.

I hope you found this podcast useful. Once again, if you want to leave me a review, go ahead and do that on iTunes, or you can always send me an email: Andrew@truecondos.com. You can call me: 416-371-2333. That’s my direct line, and of course, you can always find me at Truecondos.com. Thanks for listening and until next time, have a great week.

Thanks for listening to the True Condos podcast. Remember, your positive reviews make a big difference to the show. To learn more about condo investing, become a True Condos subscriber by visiting Truecondos.com.

Tags