Welcome to my blog on housing, culture, and design! I’m Steve Fudge and I’m celebrating my 31st year as a realtor and property consultant in Toronto, Ontario, Canada.
After the Bank of Canada started increasing interest rates in March 2022, the Toronto real estate market began to shift. If you want a brief overview of the 8 interest rate increases and how that impacted borrowing costs here’s my post –> Rising Interest Rates And The Toronto Real Estate Market.
Not only did the dizzying sums that properties were selling for in the spring stop and begin their decline (with the average sale price for a Toronto house now 20% less than a year ago at the time of writing) but the volume of real estate being traded has also plummeted. In fact, only about half as many properties are selling now as a year ago.
After the March and April interest rate increases, the Bank of Canada was vocal in letting Canadians know bigger escalations were coming. As spring transitioned into summer, many buyers elected to retract from the market – as well as the city in an effort to escape Covid19 – which meant the pool of Buyers was noticeably shrinking. They were also actively hunting for value propositions, ergo highly motivated Sellers.
During the summer many Sellers resisted and held firm, listing and relisting their properties multiple times. Caught in the doldrums of uncertainty, the summer market felt rudderless. Everyone rationally understood that rising interest rates were biting into Buyers’ purchasing power, but everyone questioned to what extent it would translate into price declines. Was the market adjusting or crashing? Was the Bank of Canada’s solution to inflation temporary or enduring?
Essentially, in all the uncertainty confusion reigned. Which was understandable. After all, just a few months earlier the demand for real estate was scorching hot and consumed by FOMO. And while there were many Buyers who still genuinely wanted to purchase a ‘home’, they were nervous that the market was cratering – so they started looking to Sellers to absorb the potentiality of future price declines by offering less. Many Sellers took offense and removed their properties from the market. In some ways, we’re still living with that residual effect. Only half the volume of real estate is being traded compared to a year ago.
With fewer and fewer properties coming to market for sale – and bidding wars once again running rampant for the few properties that do – many Torontonians are reconciling that they may have to rent for the foreseeable future. Thus, demand for rental properties is continuing to rise and rents are trending upwards. Landlords are readying their investment properties to show at their best this Spring – and taking the time to find quality tenants.
Here’s our advice!
(Be sure to scroll to the bottom to have a peek-a-boo at our current lease listings at 84 O’hara: Three Sweet Suites For Rent On O’hara Avenue In Historic Parkdale If ever there were a property perfectly positioned to generate income – it’s this one!)
Knowing When The Time Is Right
Depending on where your investment property is located, its size and condition, and what unique features it has, few vacancies and a slow but sure decline in supply mean that, as a landlord, now is the time to dust off those rental contracts and start employing a sound, proactive strategy to place tenants in their investment properties.
Most landlords are now comfortable asking for similar sums to what their units were garnering pre-pandemic, while others are pricing high with the hope that the tightening conditions and lack of available options will pay dividends. Others, depending on the calibre of their rental, are choosing more fair and affordable pricing, in the knowledge that we all have to do our part to mitigate the affordability issue in Toronto.
Be Aware Of Policy
Even beyond market conditions, being a landlord can be challenging. Back in 2018, I wrote, The Other Side Of Rent Control And Toronto Real Estate, when the rental market was in a very different situation. I talked about a number of issues, including how rent control was updated with the Fair Housing Act of 2017 to close loopholes and to create more affordable housing. While rent control in spirit does accomplish these, there are many who interpret rent control measures to favour tenants, especially from an investment and ROI standpoint for the landlord.
Now more than ever, it is advisable to be well-versed with rules and regulations governing landlords and tenants. Refresh your familiarity with the Residential Tenancies Act, especially the rules and regulations that changed during COVID-19. It would be wise to consult the Landlord and Tenant Board (LTC) often for up-to-date information. Their FAQ portion of their website in particular is very helpful.
The key message I’m imparting here is that knowledge is power, especially when it comes to policy and regulations – many of which could either help or hinder your efforts to conduct your business as a landlord. It’s advisable to have your finger on the pulse of policy.
Beyond doing research and understanding market dynamics to help you manage your property investment well, here are some helpful, tactical tips to assist in leasing your property and finding tenants that fit in well with your lifestyle and objectives as a landlord.
Never Underestimate The Power Of Excellent Property Promotion
The search for ideal tenants starts with a powerful property promotion.
Competition in a city like Toronto is fierce, which is why marketing your property is more important than ever – to make your process more efficient and, ultimately, successful. It is helpful to know your target market, and where they might be most likely reached. Does your prospective tenant live on social media? Which apps are their favourites?
When it comes to promoting the property itself, details matter. Much like when you are trying to sell a property, you must present your property in its best, most alluring light to draw tenants without misrepresentation. In this respect, small steps can yield big results. Before listing, have a deep clean done professionally of your property. Don’t forget the appliances – including the inside of the oven! A fresh coat of neutral paint will make any space feel brighter and fresher – and communicate that it has been well cared for.
Professional photography is a real plus, and can best demonstrate the benefits of your rental, showing the proportion of space, lighting, and more. Poor photography can really do your property a disservice and may deter people from considering your listing – in error! Overconfidence is snapping photos with your Pixel or iPhone may not serve you well, here.
At Urbaneer, we have a uniquely tailored approach to help landlords promote their properties. It’s all about exposure. We advertise your property on MLS/Realtor.ca and also advertise through a number of other avenues where prospective tenants are looking for leases, like Facebook Marketplace, Kijiji etc. We also tap into social media, with listings on Urbaneer.com, and Urbaneer’s Facebook page, Instagram, and Twitter feed, including sponsored promotions.
We develop a comprehensive feature sheet to promote your rental property because every dwelling tells a story. We focus on the benefits of the property itself and communicate key features, but also highlight the location, amenities, and area benefits.
Just like a purchase, where a rental property is located often ranks high for tenants, which is why being informed on current area amenities, like green space, essential food, and retail locations, help promote the convenience of your dwelling. As a landlord, you will be well-served to raise awareness around neighbourhood amenities and resources.
In fact, we have found focusing on the benefits of nearby amenities is critical in a challenging market. This approach was the cornerstone of our sales and marketing program for our seller client’s condominium in West Queen West where there was a lot of competing supply! We documented this in our post called How Urbaneer’s Toronto Real Estate Marketing Program Sold This Sun-Kissed Contemporary Loft In Riverdale’s Printers Row.
We also provide support with showing feedback and help with offers, tenant reference/background checks and help with closing tasks.
Once you’ve received interest in your property, it is time to find the right tenant. One of the most important steps in finding quality tenants is asking the right questions. Treat the process like a job interview. Feel free to add questions about behaviours and traits in a tenant that matter to you, but here is a good list to work from:
• Do you currently rent, and if so, where?
• How long have you lived in your current home?
• Why are you looking for a new place to live?
• What date would you want to move in?
• What kind of work do you do?
• What is a rough estimate of your income?
• How many people would be living with you?
• How many people living with you smoke?
• How many parking spaces would you require if you rent here?
• How many pets do you have?
• Do you think your current landlord will give you a favorable reference?
• Does your current landlord know you are thinking of moving?
• Have you ever had an eviction?
• Are you familiar with our rental application process?
• Have you filed for bankruptcy recently?
• Would you be able to pay the security deposit of ($ amount) at the lease signing?
• Are you willing to sign a 1-year lease agreement?
• Do you have any questions for me about the process?
Past behaviour is often predictor of future behaviour, which is why you enquire about things like bankruptcy, eviction history, and references. You can also gauge tenant lifestyle with questions around smoking, pets, guests, how many people would be living there, etc.
Keeping Good Tenants
It goes without saying, but finding quality tenants is crucial to making your property investment viable. This projected success is increased if you can retain those tenants for the long term.
Have you read my past post: Dear Urbaneer: How Do I Find And Keep Good Tenants? In it, I offer some helpful tips on the process of landing quality tenants, including ideas for advertising and staging properties for lease.
Once you’ve signed a tenant, how do you maintain them for the long term? Reducing tenant turnover is preferable. A long-term tenant represents long-term, steady income, without the costs associated with marketing and advertising your property. You can also forgo the hassle and work of landing new tenants repeatedly. There is also the possibility that a longer-term tenant may be more inclined to take greater care in using the property.
Like so many things in a successful business, it comes down to building relationships. Make sure that you offer open lines of communication to your tenant. Many issues can be resolved before they become problems simply by discussing them ahead of time.
Be timely with repairs and maintenance. Not only will this help to preserve the integrity and state of your property investment, but it also communicates that you are invested in your tenant’s happiness and comfort as well. It’s even better if you fix things before they get to the point where they are broken. Being proactive goes a long way.
As a rule of thumb, be reasonable with rent collection. If there is a short-term problem (which has emerged more commonly during COVID-19 due to job losses and income interruption) that might be temporary, be accommodating. It goes far in establishing that relationship that will encourage tenants to stay put.
This article from the Toronto Star “Thinking Of Renting Out Your Condo, Basement Or House? Two Experts Have Crucial Advice On How To Avoid A Disaster” offers sage advice.
Securing a tenant who is seeking a rental with a specific exit date in mind may serve you better for the long term. After all, given we anticipate the rental market to only improve, you may be able to realize a higher rent within the next 6 months. This is particularly important for those who own properties that were completed pre-2018 that are bound by Ontario’s rent control guidelines. If you rent to a tenant who has a pre-determined exit date you may find you will be able to garner a higher rent at that time which will be greater than the rent guidelines prescribed by the province annually.
Here are some of our past blogs relating to renting and apartments:
When you’re searching for a new rental to call Home, sometimes it’s difficult to match your wishes, wants, and needs for a convenient central location – and – a fresh modern living space.
And sometimes it’s not.
For those whose quality of life is enriched by having access to everything – village shopping, public transit, and recreational & relaxing green spaces – and who recognize the value of self-care living in a legal fully retrofitted substantially renovated 1895’s Victorian residence, these three sweet suites in Toronto’s historic Parkdale neighbourhood are ready for immediate occupancy.
And if you’re a lover of the west end and all things cultured and cool, this new lease may be the one for you! One of the King West neighbourhood’s well-regarded loft conversions is ‘The Massey Harris Lofts’ at 915 King Street West. Originally built in 1899 as the Massey Harris Farm Equipment head office, the building was converted in 2003 to create 46 unique loft units. This historical loft building – restored by Canderel Stoneridge – features 100+-year-old original brick walls and wood beams. Welcome to Loft 405 – dream digs for a young professional or couple!
Are you a property investor who is finding it challenging to rent units during the pandemic? With decades of experience navigating the ups and downs of the market cycles of Toronto real estate successfully and profitably, my team and I have unique strategies to support you.
My team and I are here to help!
With decades of experience navigating the ever-changing Toronto real estate market, a commitment to promote the sale of properties like yours with interesting and relevant information, and the ability to guide Buyers with credible insights and well-informed guidance, we are here to help without pressure or hassle.
Thanks for reading!
-The Urbaneer Team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-800
– we’re here to earn your trust, then your business –
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*Love Canadian Housing? Check out Steve’s University Student Mentorship site called CanadianRealEstateHousingandHome which focuses on architecture, landscape, design, products and real estate in Canada.