Condo investment in Toronto might not be as lucrative as it used to be, but given the comparable rents extracted, it’s a lot better than most people think.
Imagine renting out a single-family detached house worth over a million dollars; the wear and tear, maintenance and number of occupants make it a headache, says Zia Abbas, founder and President of Realty Point.
“I have a house in Markham that I rent for $2,900, and the very first monthI got hit very badly,” he said. “My tenant called about a water leak from the second floor to the family room. Then the basement laminate is wobbly, they said, so I fixed that too. Then the garage tap leaked into the basement.
“During the first 15 days, I spent $3,000. It’s quite difficult to deal with a tenant in the low-rise market rather than one in the high-rise market.”
Furthermore, a 3,000 square foot single-family detached house in Richmond Hill worth $1.6 million would fetch the same rent as a 750 square foot condo in downtown Toronto.
“With a house in Markham or Richmondhill worth $1.6m, the most you rent it for $2,800, maybe $2,900,” said Abbas. “In downtown Toronto, you rent a 750 square foot, small two-bedroom for the same price. One is shy of 3,000 square feet and the other one is between 700 and 750 with two small bedrooms.”
Davelle Morrison, a broker with Bosley Real Estate, notes that condos are still more expensive to rent than houses converted into apartments.
“I have a place in Leslieville, and I rented out a one-bedroom for $1,600 a month,” she said. “If that was a condo, it would be $2,100. I rent the two-bedroom unit out for $2,250, bt if it was a condo it would be as high as $2,700.”
However, condos are the newest stock of housing in Toronto. Even though purpose-built rental buildings, most of which are old, have higher square footage than condo rentals, they’re cheaper.
“The condos tend to be newer, which everyone wants, and they have amenities, which everyone wants,” said Morrison. “Most of the rental stock is quite old. If you go into purpose-built stockm, you have old kitchens, old bathrooms, and radiators. Funny thing is those purpose-builts have more space. A lot of young people these days want things that are shiny and new. On the buying side, it’s the same—they don’t want something that’s old and needs work.”
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