Real Estate

Still buying rentals?

  • Last Updated:
  • Dec 13th, 2022 10:20 am
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[OP]
Newbie
Jul 13, 2021
64 posts
15 upvotes

Still buying rentals?

Hi,

Curious to see what’s RFD sentiment on buying rental properties in today’s rate environment.
31 replies
Deal Addict
Jan 17, 2006
2422 posts
2626 upvotes
Toronto
I'm looking, if deal that make sense comes up I will buy and I came across couple close ones.
Sr. Member
Jun 15, 2015
966 posts
1177 upvotes
Thornhill, ON
I'm keeping track of price movement in some areas. Will look aggressively in early spring. No pre-cons or assignments. I'm part of a group and we may buy up to 10 units.
Deal Addict
Nov 13, 2013
4038 posts
2528 upvotes
Ottawa
I sold everything during pandemic. Not because I predicated this but various circumstances. Only having PR and sitting on cash I am looking for a rental duplex or triplex or maybe a future retirement condo I'd rent out now.
Prices are also certainly headed lower but the right deal now could still be worthwhile. I don't understand those that are leveraged to the hilt and still on the hunt for the 4th property. The risk vs reward doesn't seem to to be there. If you are sitting on a few mil in equity or less and you have a pension the upside is really minimal and ending up back where you started even if a 20% chance doesn't seem worth it. But granted some might have more expensive aspirations or future lifestyle.
Deal Addict
Mar 2, 2017
3294 posts
6304 upvotes
Toronto/Markham
Not condo rentals that's for certain.

I have a couple of pretty serious buyers but mostly for detached with conversion potential next to major transit stations as per Bill 23.

Also recently saw a 7 plex in the core sell for dirt cheap, we missed it by a bit, had some tenant risk.

For anyone not scared of renos there are some decent opportunities well below market imo but they go quick and you need capital, usually not the easiest to finance in some cases.
RE Broker
Deal Addict
Feb 19, 2019
1821 posts
2808 upvotes
Stouffville ON
RichmondCA wrote: Not condo rentals that's for certain.
I have done calculations for quite a few condos with 20%, with the current rates many of them are not only cashflow negative but also loosing money every month. Pretty much only end users are buying right now.
Full Time and Full Service Realtor
Deal Addict
Dec 10, 2017
1986 posts
2046 upvotes
Toronto
senasena wrote: I have done calculations for quite a few condos with 20%, with the current rates many of them are not only cashflow negative but also loosing money every month. Pretty much only end users are buying right now.
Isn't the rent to purchase gap even bigger with housing in many areas of GTA?

I do understand why numbers dont make sense on Condo, just thought the same for housing (ignoring the long run play of the land value and possibly renovate to multiplex on sfh lot ect).

I guess thats the reason housing still looks ok for investing / renting?"

The one area I feel like that makes sense as an outsider (never been a landlord, just follow the market a bit) is the near border home rentals. Cost for a home in fort eerie area is super cheap compared to GTA, yet rent vacanacy and market rental rate is better than gta suburbs that sell for 2-2.5x the house cost. Border demand for rent from nursing and the like has skyrocketed and stayed strong since covid started.
Deal Addict
Jan 17, 2006
2422 posts
2626 upvotes
Toronto
senasena wrote: I have done calculations for quite a few condos with 20%, with the current rates many of them are not only cashflow negative but also loosing money every month. Pretty much only end users are buying right now.
Try to do same calculation for houses, those are even more money losers in gta unless you find some hidden gem stone that can be salvaged with right tools or some multi residential units re.
[OP]
Newbie
Jul 13, 2021
64 posts
15 upvotes
RichmondCA wrote: Not condo rentals that's for certain.

I have a couple of pretty serious buyers but mostly for detached with conversion potential next to major transit stations as per Bill 23.

Also recently saw a 7 plex in the core sell for dirt cheap, we missed it by a bit, had some tenant risk.

For anyone not scared of renos there are some decent opportunities well below market imo but they go quick and you need capital, usually not the easiest to finance in some cases.
Why no to condos?
Deal Addict
User avatar
Sep 4, 2005
3490 posts
1377 upvotes
Toronto
fogetmylogin wrote: I sold everything during pandemic. Not because I predicated this but various circumstances. Only having PR and sitting on cash I am looking for a rental duplex or triplex or maybe a future retirement condo I'd rent out now.
Prices are also certainly headed lower but the right deal now could still be worthwhile. I don't understand those that are leveraged to the hilt and still on the hunt for the 4th property. The risk vs reward doesn't seem to to be there. If you are sitting on a few mil in equity or less and you have a pension the upside is really minimal and ending up back where you started even if a 20% chance doesn't seem worth it. But granted some might have more expensive aspirations or future lifestyle.
Depends where you are in life. If you're younger, can service the debt (at higher rates), and have the equity for another than I don't see why not.
When you have time (and equity hahaha) on your side, now (and in the near future) will be a great time to buy.
Deal Addict
Jan 17, 2006
2422 posts
2626 upvotes
Toronto
Seeknfind wrote: Why no to condos?
Condos in good location with current rents and demand and future immigration is better choice right now, houses in burbs would need to drop another 20% to make sense as rentals.
Deal Addict
Dec 10, 2017
1986 posts
2046 upvotes
Toronto
ilim wrote: Condos in good location with current rents and demand and future immigration is better choice right now, houses in burbs would need to drop another 20% to make sense as rentals.
yeah, it really is area specific in comparing the two.

go look at what a rental costs on the prime toronto detatched houses. the ratio of rental payment to monthly carrying costs is so much worse for those than condos.

brampton houses rent for 3k and sell for over 1mil. you can get 2500 rent in a condo for a 550-600k sale price.

same with uptown, 2.5mil + houses rent for 6k and that range...
Deal Addict
Jan 17, 2006
2422 posts
2626 upvotes
Toronto
krn905 wrote: yeah, it really is area specific in comparing the two.

go look at what a rental costs on the prime toronto detatched houses. the ratio of rental payment to monthly carrying costs is so much worse for those than condos.

brampton houses rent for 3k and sell for over 1mil. you can get 2500 rent in a condo for a 550-600k sale price.

same with uptown, 2.5mil + houses rent for 6k and that range...
Agree, I was looking and still am (more like the getaway place for myself) in suburbs and the ratio is worse, and then thinking about that I would need to commute there and maintain the outside and inside of the house put me off completely from buying a house in the burbs for rental.
Newbie
Aug 24, 2021
91 posts
151 upvotes
Markham
Downtown or yonge-sheppard/finch condos will probably have decent cashflow if it drops a bit more. Detached houses in the suburbs as rentals is pure speculation.
Sr. Member
Jun 15, 2015
966 posts
1177 upvotes
Thornhill, ON
Sfhs are rife with risks, on a relative basis. I'm wary of ending up with tenants who turn the basement into grow ops :rolleyes: So, I'm sticking with condos.
Deal Addict
Dec 10, 2017
1986 posts
2046 upvotes
Toronto
DisneyKruze wrote: Sfhs are rife with risks, on a relative basis. I'm wary of ending up with tenants who turn the basement into grow ops :rolleyes: So, I'm sticking with condos.
Lol I was going to say, alot more can go wrong repair wise and good luck chasing renters for that damages money

Also, renters turning a rental into a rooming house is increasingly common (or airbnbing it). Your almost forced to do it yourself otherwise you just miss on the profit and take the extra risk.

Shitty state due to lax enforcement of regulations.
Deal Guru
Feb 22, 2011
13091 posts
16692 upvotes
Toronto
senasena wrote: I have done calculations for quite a few condos with 20%, with the current rates many of them are not only cashflow negative but also loosing money every month. Pretty much only end users are buying right now.
For houses it's even worse.

A $2m house in Toronto will rent for like $4k.

And people will say yea but they aren't making anymore land.

Yea that's why you paid $2m for it, you already paid a premium for that.

I'm willing to bet someone who bought 4 $500k condos and rented them out for $10k per month will come out way ahead.
Deal Guru
User avatar
Oct 16, 2008
10138 posts
4418 upvotes
Vaughan
sircheersa wrote: For houses it's even worse.

A $2m house in Toronto will rent for like $4k.

And people will say yea but they aren't making anymore land.

Yea that's why you paid $2m for it, you already paid a premium for that.

I'm willing to bet someone who bought 4 $500k condos and rented them out for $10k per month will come out way ahead.
Yep, rents for 2 condos (1+1) are more than rent for 1 house. Condos can be sold separately if needed.
...
Deal Guru
Feb 22, 2011
13091 posts
16692 upvotes
Toronto
teoconca wrote: Yep, rents for 2 condos (1+1) are more than rent for 1 house. Condos can be sold separately if needed.
It's also easier and faster to start and scale.

A lot of people waiting many years to buy a house could have built up a lot of equity if they were buying condos the last 10 years for $300k.

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