How to capitalize on single-family investment properties

by Neil Sharma on 13 Jul 2021

Rental demand for houses in Ontario is through the roof, but given the exorbitant price points to buy such dwellings, do the numbers make sense for investors?

According to Claude Boiron, a real estate broker, author, university instructor and founder of Boiron Group, investors who can secure single-family homes outside of the MLS will have a better time carrying the investment.

“For the most part, any single-family home investor I know of, if they’re buying off of the MLS they’re duplexing the property, which means they’re legally adding a basement suite to make the numbers work, or they’re buying off-market from other real estate investors,” he said. “They also wholesale, which is the practice of buying a property privately and before closing they assign it to an investor for a higher price.

“I like to look at properties that have been on market for more than 15 days, and in this market that means they tried to sell on an offer presentation and failed or they overpriced it and now it’s lingering on the market. People assume there’s something wrong with a property that’s listed that long, but it might be a misstep with marketing. If the seller has already bought another property and they have a drop-dead date they have to sell this property by, that’s another good way to secure a single-family home.”

Boiron says there are myriad reasons homeowners become desperate to offload properties. He recounted a story in which a homeowner hadn’t made a mortgage payment in three months and a bailiff was coming to change the locks, so the homeowner sold the home to an investor at a price the latter found favourable.

“There are all kinds of reasons. A hoarder, for example, doesn’t want 100 people in their home for viewings. They’d rather leave $100,000-200,000 on the table than have people in their house because it’d be embarrassing. It sounds unbelievable, but I’m in that world and I promise you it’s true.”

Of course, the closer to Toronto the house is, the more difficult it will be to carry, despite voracious rental demand. However, registering on buyer lists is an effective way to find these properties, and possibly deals as well, within the GTA or without, added Boiron.

Out in Windsor, rental demand for houses is very strong, according to Brady Thrasher, a broker with RE/MAX Preferred, who noted that there’s also a burgeoning market for “executive rentals” in the city.

“We’ve seen an increase in demand. It’s not normal to see a house rent for $5,000-6,000, but you will see them because of ongoing infrastructure projects like the new bridge and hospital, so companies relocate to the city and look for that kind of interim housing for employees like engineers and planners,” said Thrasher. “The rental houses we mostly see in Windsor will be townhouses that earn investors $1,500-1,600 a month, but a single-family detached rental will go for $1,800-2,500 a month. Demand is very strong for these.”

In Peterborough, duplexing bungalows can also earn investors hefty returns, says Stephanie Yates, a sales agent with Century 21 United.

“People will buy bungalows with side entrances and convert the basement into an apartment and rent that out in addition to the main level,” she said. “Some people are even doing student housing where they buy houses and rent out the rooms. I had a nice listing in Peterborough with seven or eight bedrooms and they all could have been rented out for $600 a month each.”

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