Personal Finance

Income Property - Toronto Condo

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  • May 17th, 2015 3:03 am
[OP]
Newbie
May 15, 2015
1 posts
Toronto, ON

Income Property - Toronto Condo

Hi all,

This is my first post on this forum, so hope it all goes well.

I am looking into buying a condo with the sole intention of earning rental income, but this will be my first income property, so I was wondering if anyone had any insight as to things I should consider. I think the condo market is severely overvalued right now, so I don't plan on making the purchase until late 2016 or early 2017.

What should I consider becoming a new landlord? How should I calculate the rent I charge the tenants? Is it hard to find tenants in Toronto? What neighbourhoods would you recommend looking into (I'm thinking either downtown around Union or uptown between finch stn and eglinton stn; but I am open to looking into other neighbourhoods as well)

I was thinking of renting out the condo on a room by room basis (similar to how landlords rent out houses to university students), but I'm not sure what the demand is like to rent a single room versus a whole condo. If I do a room-by-room basis, I was also thinking of having my son rent a room (since he already works downtown this will be more convenient for him), and have him act as the property manager so the other tenant(s) can directly contact him if there are any problems. My only concern with this idea is would people even want to live with the property manager (would there be any animosity between the tenant(s) and my son)

These are all the ideas buzzing through my head, and I was wondering if someone who may have experience in being a landlord help guide my thought process.

Thanks in advance,
4 replies
Newbie
Feb 20, 2015
64 posts
4 upvotes
Vancouver, BC
I think you should start by-

1. Reading the roughly 10,000 current threads on this topic here already. It will take you a few weeks but is worth it.

2. Go to your local book store and go to the "Real Estate" section and buying some books on the topic.
Deal Fanatic
User avatar
May 2, 2006
8100 posts
2136 upvotes
GTA
What makes you think that in the late 2016 - early 2017 the condo market will be less "overvalued"? :)
Deal Addict
User avatar
Oct 8, 2014
1015 posts
227 upvotes
Unionville, ON
Torontonian2015 wrote: How should I calculate the rent I charge the tenants?
You don't calculate how much rent to charge, you have to charge based on what comparable units are going for in your neighborhood. If according to your calculations you need to charge $1600/month to break even, but the market rent rate is $1400/month, then guess what, you lose money every month.

1) What is the cost of the condo that you plan to buy? What is the amount of money that you plan to put as a down payment on it? Based on these two factors, you will be able to calculate what your mortgage payment will be. Take this mortgage payment, and add the condo maintenance fee, the property tax, and the insurance, to get your monthly carrying cost.

2) What is the approximate rent that comparable condos are renting for in that neighborhood? (you can research this on mls.ca)

What is the difference between 1) and 2) above? That is your profit.
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Deal Fanatic
Mar 27, 2004
8052 posts
6086 upvotes
Toronto
Don't bother. Put your money into a REIT instead.
Full-time Realtor

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