Welcome to urbaneer.com's Home Of The Month. This feature provides a snap shot of what urbaneer.com's Buyers have recently purchased in the City of Toronto.
This month we feature a purchase by an urbaneer client who wanted to be strategic – by both building his investment portfolio while potentially securing a property that can serve his future self.
Our client, a young doctor who currently owns a concrete 'n cool loft condo in the downtown west core, contacted us with the idea of purchasing a house that would be suitable for the next stage of his domestic life – one that will include a partner and kids. We applaud this approach – given the Toronto real estate market that has been consistently escalating in value for near two decades – by securing property now and holding it for the long term is an intelligent way to build up net wealth. However, it turned out to be a bit more challenging than we collectively anticipated.
First, our geography included both the central east and west neighbourhoods that flank the central business district which are family friendly. These areas included Leslieville and Riverdale to the east; and Trinity Bellwoods, The South Annex and Palmerston to the west. These locations are predominantly home to vintage century row, semi and detached houses that are in varying degrees of condition. In fact, as we searched we had to reconcile that several houses – while they had great locations and space plans – required substantial renovations that would cost to the tune of $150,000 to $250,000. Our bachelor didn't want to tackle a substantial renovation that would take months to complete, and while he had a generous budget, the other issue was at what point would he personally occupy the space and whether we would place a tenant in the property until such time it suited his lifestyle. As we searched for property, it became clear that while our Buyer certainly was open to living in a house sooner than later, his currently bachelor pad hit all the right marks for comfort and ease.
We looked at one house near Trinity Bellwoods Park that hit a lot of the right buttons. Owned by a CBC journalist and personality from the east coast, the restored vintage 5 bedroom semi-detached house had a lot of panache. We liked it a lot, though our eye brows collectively raised when it received a bully offer that pushed the $1.3 million list price to $1.5 million. For our Buyer, it meant that a substantial down payment would be required in order to bring the monthly carrying costs into a range suitable for the monthly rent it would garner (we estimated about $6000 a month) but, more importantly, he realized that it wasn't easy buying for your future self today. How could he be sure the house aesthetically would suit his future partner, and even be in good enough condition when his time came to occupy it? In many ways, buying this renovated house was a bit premature, for he would have to pay top dollar for a property where the kitchens and baths could be deemed dated in five years or so, at which point it would require upgrading, especially should any tenants cause damage.
Shortly thereafter, a legal duplex in Playter Estates – just north of The Danforth between Broadview and Chester – came to market which offered an interesting solution. The house was generating low rents and had knob and tube wiring – which is problematic when it comes to securing building insurance – but otherwise was solid with many character details, included a two car garage, and was located in the Jackman Public School catchment district which is one of the most highly coveted schools in the downtown core. Listed at $799,000, we proposed the Buyer consider purchasing this house with vacant possession and, on closing, execute a modest building tune up that would get the house in decent condition (and with new wiring), and then rent the two units at new market rents until such time as he wanted to occupy the house. When that time came, he could effectively gut the house and expand it, creating a contemporary turn-key residence for his partner and future family in a neighbourhood where family homes command upwards of $2million. Until that time, he could generate a reasonable income and treat it as part of his investment portfolio.
Garnering multiple offers, our Buyer bid 13% over the asking price to secure the purchase, and then invested around $60,000 upgrading the house and garage. The property was then placed on the market for rent with both suites being snapped up over a weekend, such that it now generates a gross income of $4000 per month or a 4.5% cap rate.
Here's some photos of the two rental units once they'd been upgraded:
2-Bedroom Garden Suite: Main & Lower Levels
2-Bedroom Upper Suite: Second Level
This was a stellar purchase, for it offers a lot of flexibility for our Buyer. Given the demand for this area, where house prices continue to out-perform other less desirable locations, our Buyer is strategically growing his net worth.
A big thanks to our client for entrusting us to help you find your Home!
We LOVE what we do, and consider ourselves most fortunate.
Serving first and next-time buyers, relocations, renovators and those building their long term property portfolios, our mandate is to help our clients choose property which will realize the highest future return on their investment while ensuring the property best serves their practical needs and their dream of “Home” during their ownership. At urbaneer, we identify a property's best qualities, features and insouciant charm in the context of your wishes and wants, plus your future target market. Although searching for the right property can be an intense and sometimes lengthy process it is, without fail, rewarding both to our clients and the urbaneer team. We are so grateful to be the realtor of choice for so many Torontonians, and new arrivals.
If you, or someone you love, has specific real estate needs, wishes and desires, and would enjoy the personalized service of a Top Producing boutique real estate team who subscribe to a pressure-free approach, please know we're here to help at urbaneer.com.
~ Steven and the urbaneer team
earn your trust, then your business
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 530-1100
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Buy Of The Month