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The most important thing you can do as a potential investor is prepare yourself for what will likely be the largest financial decision you make in your life. My Investors Guide takes you through the steps of the investing process.
Thank you again for helping us through the mess while getting our place, we appreciate it more than you know.
Been very happy with my purchase. The building is nice too, would recommend to any future clients.
We are very happy. Let us know when you're going to be in the 'hood... and if you have time, we'll take you over to show you the condo!
I love my house and my neighbourhood. I'm plugged into the neighbourhood and attended our local resident's association meeting. I love walking to St. Lawrence market along the Esplanade (a great blvd, who knew!?). I love the underpass park and look forward to the opening of the Don River park. And I can walk to my exhibit at the Brickworks -- all good. Best of all the new job is work from home. I've completely deleted my commute.
Thank you so much for all your hard work and energy in finding us a house we love. Thanks also for all your help around the roofing issue - You were a calm force in moments of fear. Wishing you the very best. It's been a pleasure working with you.
Great news. Thank you for everything... Have a great summer and if you ever find yourself out west look me up!
Thanks, Laurin, yes, everything went well. So far so good in the new place; the new paint already makes a huge difference! I hope you're doing well. Take care and thanks again for all your help.
Quite excited actually -- despite longtime off yet -- and still very happy with the decision. Think it's going to be a great area in a few year's time and quite like the upgrades option included in the package. Plus, I like the lower East side -- think a good area with big change going to happen.
The house is simply great. I had a fear that I would come to think I made a mistake, but frankly, it's pure gold... despite the relatively modest square-footage, it feels palatial. I'm very happy. Thanks for your help during all of this! Enjoy your summer.
Thanks Laurin. Hope to see you, sometime. We are loving Toronto and this neighborhood and this house. It's all good.
Thank you for all of your advice, I am so excited and anxious to move in! Thanks.
Thanks so much Laurin!! Everything went well and now we are demolishing all the uglyness out of the place. You shall be invited to see it after the renos! A+
We couldn't be happier in our place. And we really appreciate all your help. We've been working on the backyard and a bit on the front. Maybe we'll take on the basement some day...
Brickwork is done and looks unbelievable. The whole place looks incredible right now - completely night/day from how it looked when we moved in. So happy here! Hope all is well with you.
Loving the new place, still settling in. Slowly buying furniture... I didn't realize how big of a cost THAT would be!! Have the essentials now, just looking for a couch now. I'm really enjoying living downtown. I'm lucky to be working at clients in the downtown core.
So far moving madness is still pretty crazy, but I think I'm settling in OK. I really do love the space, I feel like I certainly made the right choice. I hope the rest of your winter goes well and perhaps sometime in the long future I will be contacting you to sell! Thanks for your help.
Thank you very much... Your help in selling the house was greatly appreciated.
To any potential sellers or purchasers. I have used the excellent services of Laurin Jeffrey, both to purchase real estate and to lease out my rental properties. He has not only been a fabulous real estate representative, but he goes way beyond the term "total service". I recommend Mr. Jeffrey with no hesitation of any kind.
The move went fine and everything is fantastic! The flat is a perfect space for me... things are excellent. Thanks so much for your help.
Working with Laurin has been an extremely rewarding experience with lots of insight into the market we were looking at. With his help, my wife, children and myself can relax in our own home. There was a sense of urgency due to us expecting our second child and needing to be prepared before the birth. We had looked at many locations and with his persistence and patience were able to get the right house for the right price at the right time for us.
I reside in a terrific house that I am proud to call my home. It not only suits my budget but my lifestyle. On Laurin's keen advice I viewed the property, I felt he really listened and had my needs in mind from the beginning. His expertise definitely assisted me in making the right purchase - from lifting rugs to look for flawed flooring, to checking for cracked windows, water damage, etc. The transaction was stress-free; what I thought would be a lot of work was made effortless due to Laurin's savvy. My home has even been appraised at about 20% more than what I paid less than a year ago!
Thank you so much for all the work you put into finding us a perfect first home... as soon as we take possession, we would love to have over you for dinner! Thanks again!
Thank you for all your help on making this happen.
THANK YOU SO MUCH!!! You have been very patient with me and I appreciated it very much.
Thanks to you for making this such a smooth and easy experience. If I'm ever in the market again or I know anyone looking, I would be happy to pass along your name.
Brilliant! Thank you so much for all your help!
Thanks again for the house shopping help - you rocked and we really appreciated all the extra attention!
Thank you again for all your help! I think it was a bit more difficult than either of us had expected, but thankfully everything worked out. We are very excited!
Thank you for being so helpful and diligent.
Laurin, I really appreciate you have had to go above and beyond on this one. Everything is in order and my stress levels are now starting to drop! You really earned that drink from me!
Working with Laurin has been a pleasure, almost effortless. Good subject knowledge, timely. He exudes a relaxed professionalism which adds to the experience. Highly recommended.
I have retained Laurin Jeffrey on 3 separate occasions and in each instance, he has been a fantastic resource and a skillful realtor. I may have need of his services in the next while and would not hesitate to call or email him. He has been prompt in all his communications, and an excellent guide to the complexities of the Toronto real estate market. I recommend his services to anyone seeking to participate in the Toronto real estate market.
Thanks a lot, you found me a fantastic unit at a price I wanted to pay so really thankful for that.
One of the first things you have to decide is what sort of income property you want to buy. From condos to houses, or even to multi-unit homes, there are a variety of options out there. They come in a range of sizes and prices, and it is likely price that is going to determine which type of property you decide to pursue.
It really comes down to which are the easiest to own. Condos are the simplest rental to own. Just pay the condo fees and pretty much everything is taken care of for you. You don’t have to worry about replacing the roof or fixing windows. But when you get into freehold properties, that is when you will need to be prepared to deal with maintenance issues. From furnaces to leaky basements, new roofs, appliances, flooring and more.
And when you get into houses with 3 or 4 units, you are now compounding things with multiple tenants. In a condo, you have one tenant at a time – but a multiplex means dealing with more. Everything will multiply: you’ll be finding tenants three or four times as often, and that also means that many different personalities to learn to work with. Never mind the added complexity of multiple fridges and stoves that can break down.
All of that being said, there are financial benefits to having multiple tenants. Instead of one renter paying you $1,600/month for a condo, you might be seeing $5,000, $6,000 or even more coming in every month. You just have more to do to earn that higher revenue. And your initial costs will be higher.
Once you have thought through the options above, you then need to realistically think about what your budget is. While you may love the idea of making $6,200/month with a trendy Victorian triplex off Queen West, unless you are willing to spend $1.5-2 million, that is not something you can entertain. At the end of the day, investment properties are about cash flow. You want to be able to pay your bills with the money you make from rent.
Investment buying is also a little different, in that you really need to pay attention to your down payment. Not only will many banks require a higher down payment to purchase a non-principal residence, but you might need it to get your mortgage payments down to a level where the rent covers them.
I suggest starting with the liquid cash you have available to put towards this purchase. Deduct land transfer tax and other associated costs (around 5% of the purchase price) and see what you have left to put down. Assume you are going to be required to put down a minimum of 20% and see what sort of mortgage that allows for. It is getting harder and harder these days to make the math work, especially with condo prices rising as fast as they are.
Now, with an idea of what you can afford, it is time to look for the right area(s) to buy in. Downtown is always popular, but the prices are starting to get too high to make investing profitable. I am a big fan of the east end, as I think there is a lot of future appreciation potential there. So much new development going, it is not as tapped out as the west end is these days. The east end also has the possibility of the Downtown Relief Line being built sometime in the future… okay, stop laughing. But you are going to want to be near transportation, or near where it is coming.
Along Eglinton Avenue is a smart place to look these days, with the Crosstown LRT nearing completion. Not only will prices rise in the area, but potential tenants will be more interested in looking to live somewhere with easy access to public transportation. And the areas you identify must take into consideration the rents supported there. A decent one-bedroom condo downtown can see $2,000/month in rent, while something similar in Leaside could be down to $1,200-1,400. Prices willbe better, but you still need to do your financial analysis and be sure that the monthly numbers make sense.
Tied to location will be the target renter you are looking for. If you buy close to U of T, expect to get a lot of students looking to rent your place. Liberty Village will attract people in their 20s fresh out of higher education. Are you looking for students or professionals, mature or younger? Or do you even care, as long as they pay the rent every month? Just be sure that you understand the demographics of any area so that you understand who the target renter there would be.
I cannot stress this enough, but no matter what type of property you decide to pursue, do your best to make sure it is something different. You want to stand out from your competition. Both to attract renters, and later when it comes time to sell. If your condo is the same as 10 others for rent in the same building, what is going to draw people to your unit over the others? The last thing you want to do is be forced to lower your rent to stand out. Look for view, high floor, boutique building (go for a loft if you can find one and the budget allows, you will never have trouble renting it out), etc. Make sure the floor plan is useful, the view isn’t of an alley, and so on.
Buy as big as your budget allows. These days, condos are getting nothing but smaller. People want some room, they want space. And if your unit is just that little bit bigger than others, you will be an obvious choice. Parking is less important than it has been in the past. You’d be better to spend the $40-50,000 a spot costs on a better unit. Especially downtown, where fewer and fewer people have cars these days.
Same goes when looking at houses, be they single unit or multiple. A groovy old Victorian rowhouse simply has better curb appeal than a tired old 1970s semi. And you’ll find that neat old houses will probably have funkier units, maybe with exposed brick or other interesting features. Those will simply appeal more to prospective tenants.
Something else you will need to pay a lot of attention to is the building amenities. Believe it or not, most people don’t use the condo amenities. Especially renters, who may move more often that owners, they have gym memberships that they can use no matter where they live. Those amenities add to your maintenance fees, which cuts into your bottom line. Don’t pay for things that your tenants will not use. Obviously less important when looking at freehold, but then you might be more concerned with what is in the neighbourhood. Is there a grocery store within walking distance? Where is the closest streetcar stop Remember, you are the one who pays the condo fees, do your best to keep them to a minimum.
Some people will wonder about buying a new condo as an investment property, I can’t say it is a good idea. If you buy resale, you can start renting it out tomorrow. With a new build, you have to wait until it is completed. And that whole time before you get the keys, your down payment money is just sitting in the builder account doing nothing for you. Sure, the unit will appreciate over that time, but you are losing out on all of that rental income. And three to five years of rent is a LOT of money. Never mind closing costs, construction delays, project cancellations, etc. Resale is always the way to go when looking or a rental property.
Something MUCH more important, is the HST rebate. When you buy a new condo, you agree in the contract to assign your HST rebate to the builder. This generally never comes up, it all happens behind he scenes. Unless… if the CRA finds out that you are not living in the unit for the first 12 months, that you are renting it out, then they will refuse to pay the HST rebate to the builder. Which means you are on the hook for that money, you will be forced to pay it to the builder on closing. There is a way to recoup the cost, there is the New Residential Rental Property Rebate, but it comes later. You will still have to cough up an extra $20-30,000 on closing. Not fun.
If you buy a property that needs some work, then by all means do it. But don’t go nuts. This isn’t going to be a feature on HGTV, you are just looking to make it safe and serviceable. Get the cheaper cabinets from IKEA, no one is going to judge you. The rental market in Toronto is SO tight these days, tenants just want a clean and safe space they can call their own. Sure, fancy finishes might allow you to charge a higher rent, but not enough to offset your expenses.
Take a triplex, for instance. If you were renting out a 2-bedroom unit on the main floor for $2,100/month and your tenants move out. You decide that the kitchen is pretty tired and needs renovation. You could spend $10k at IKEA on a basic kitchen with simple appliances, or you could blow $80k on something much nicer with stainless appliances and the whole thing. But your rent would go up maybe a few hundred bucks a month. Even if you can make $4-5,000/year more with the fancier kitchen, it would take you 14 years to recoup the cost difference between the two renos. Not worth it. And once that kitchen is looking like a million bucks, it might make the rest of the unit look shabby, so then you might be tempted to spend more. Keep it simple, keep it inexpensive. Go with laminate instead of hardwood. Don’t worry about granite counters. You want durable, not pretty.
You want to keep everything easy to fix, easy to replace. IKEA kitchens, for example, are modular. Replacing a cabinet is as easy as ordering up another SEKTION corner cabinet. And when you don’t spend a lot on renovations, you won’t be as upset when tenants damage them. And they will. Not necessarily on purpose, but just through the wear and tear of daily living.
On that note, be sure to check the place over when a tenant moves out. Give it a quick paint job if it needs it, have a cleaner come through. A clean and neat unit looks SO much better than one that is grubby and dinged up. Check the smoke detectors and light bulbs. For a few hundred bucks, you are keeping up on maintenance and keeping your investment looking as good as it can.
When buying, don’t try to time the market. You can’t. Many people have tried and most have failed. It is a good rule of thumb that prices are highest in the spring, so if you can avoid buying from March to June, it would be best. July and August are quiet times, with lower prices. Less inventory, but fewer buyers to compete with. Prices tend to rise again the fall, with another busy time in the market. But once we get into November through January, it is another quiet time. Don’t take those times as gospel, but do keep them in mind when buying.
Same goes for selling. If you have control over the timing, always aim to sell in the spring.
Second to this is the question of whether or not to sell with a tenant in place or not. That all depends on your tenant. If they are clean and neat and they place looks good while they live there, then sure, it won’t hurt to list it with them still there. Just beware, some tenants make it hard to sell. Some get resentful and try their best to obstruct the sale of the unit. From making it hard to get permission for showings, to leaving the place a mess. This is why you always want to have a good relationship with your tenants!
Many investors like to buy a turnkey property, one with a good tenant already living there, as they don’t have to spend the time looking for a tenant. They don’t have dead time with an empty unit and no rental income. As I say, it all depends on the tenant, when they may (or may not) be leaving and your time frame.
Lastly, it should go without saying, know the law. There have been a lot of changes in the past while, from landlord & tenant rights to lending guidelines and tax issues. Make sure to consult with all of your professionals so that you are as informed as you can be. Talk to your accountant, your lawyer, your real estate professional. There might be tax implications you are not aware of, for instance. And be sure to educate yourself thoroughly on the Residential Tenancies Act.