Real estate investment in Toronto is actually much simpler than people think, but you have to have the right mindset to do it. That mindset is somewhere in the middle between being too scared to jump into it before investigating every small detail and being overconfident and uninformed. As with everything in life, moderation between the two extremes is where you want to be in order to be successful with real estate.
The most successful investors we meet are confident, make decisions and don’t look back. They are not looking for a silver bullet to make easy money. But they are patient and willing to look down the road long-term. They believe in themselves and they believe in the real estate market.
Stop being scared of the “what-ifs” of property investment
You may have a dream of investing in an income property. But somehow, you always manage to talk yourself out of it. Prices are too high, the market isn’t right, you don’t have enough time – there’s always an excuse.
If anyone actually knew how the real estate market would perform, they would be the richest people in the world. There is one fact that every statistic backs up – real estate always appreciates in value in the long term. The hardest thing is to purchase that initial property and it’s like quitting smoking – the sooner you do it, the more results you’ll see over time. You have to hold your nose and take that initial risk, but you shouldn’t do it flying blind either. A Toronto property investment firm like Highgate can walk you through the entire process, from making the initial purchase to managing the property for you.
For the overconfident: Real estate investment is not a way to get rich quick
There are a few types of people who fit into the “overconfident” category of real estate investor. Either they’ve been to a few real estate investment “seminars” where they’ve been asked to fork over thousands of dollars to learn something a Realtor could tell you for free, or they’ve been watching reality TV shows where houses are flipped and fortunes are made. Either way, the overconfident real estate investor comes in with guns blazing and a little bit of uncontextualized knowledge.
The #1 thing that you should learn about real estate before you purchase an investment property is that there is no “Get Rich Quick” scheme that can possibly involve real estate. Even if you purchased a dirt cheap foreclosed property in the US after the American mortgage crisis of 2008, you would have still had to hold on to that property for a number of years to make good money on it – and that’s an extreme example that hopefully, for the economy’s sake, won’t happen again. Real estate investment is exactly that – an investment. It’s an investment of money and time. It does pay off – but only over the long term, and only if you manage your cash flow properly and make prudent initial buying decisions.
For the house-flipping bunch, the thing you don’t usually see on those shows are the hidden costs that crop up after the sale and the renovations start. There may be structural issues that were missed on the home inspection, requirements to bring the property up to code, and more – all of which can quickly nuke any profits that could have been made on the sale. Due to this and many other factors, house flipping is also not a “Get Rich Quick” scheme, unless you make prudent purchase decisions and budget properly.
Real estate investing done right for everyone
If you want to do real estate investment right, just follow these three simple steps.
Step 1 – Contact a real estate broker
Find a real estate broker you can trust – preferably one like Highgate which also does property management. Firms like this will know the rental market and the real estate market, and can educate you on both.
Step 2 – Get in touch with the market
You can read all of the books and real estate magazines that you want – the only way to really get to know properties is to go see properties with an experienced broker, even if you aren’t planning on buying one yet. Pick an area that you and your broker like, then go see about ten properties in that area. Find out what each property sells for. This will tell you how much you need to budget for, give you an idea of fair market value for the area, and start your real estate education. Don’t be worried about being viewed as a tire kicker, you will likely be buying a property with that broker one day and a good one won’t mind showing you the ropes. Repeat the process every couple of months until you have a good sense of what properties sell for, what potential issues are, and so on.
Step 3 – Purchase your investment property
If you’re already working with an experienced broker, they’ll have helped you work out what your budget should be for your investment property. Most importantly, don’t over leverage yourself in order to purchase an income property – even the best-laid plans come with unforeseen costs that you should be prepared for.
Now that you have a sense of the market, you can apply that knowledge and put in offers that are likely to be accepted on properties where you see the most potential growth, the best rental possibilities, and so on.
Step 4 – Properly manage your investment property
If your intention is to rent your property out, you’ll get the most return on investment with a property management company – especially if you are not an experienced landlord. They will help you avoid potential pitfalls like non-paying renters and more. A firm like Highgate can also help you out if you are interested in house flipping – we know the duds and the stars, and have contractors on hand who are affordable and efficient. We’ll also make sure you aren’t overleveraging yourself financially and have enough funds to do it right.
If you are interested in real estate investment, contact Highgate today. We don’t speak at fancy seminars, but you can get our advice for free – and our family has been in the real estate and property management business for decades.
Finding renters in Toronto is not hard with skyrocketing real estate prices and recent measures which make it harder for first-time homebuyers to enter the real estate market. Where it gets competitive is finding good tenants with great credit scores. The latest Pew Research Center data on social media demographics show Facebook is the breakout winner both for audience size and percentage of affluent people using the channel. Instagram, however, is worth keeping in mind if any of your properties appeal to millennials.
It’s all about Facebook advertising
When it comes to local marketing and reaching out to potential renters, the channel you should spend most of your energy on is Facebook. To get the most out of Facebook, you have to spend money on it. The simple act of “boosting” any new property listings on Facebook for a small budget to a local audience will attract renters, and it’s easy to do. Go to business.facebook.com to sign up for Business Manager, link your account to your company page, and you are ready to advertise.
Facebook is the best choice for local marketing because it allows you to advertise locally to a large, mostly captive audience. While ads on Google allow the same granular targeting by demographic and geography, they tend to be more expensive and you’ll be competing with large local property management companies with budgets that dwarf yours and push your listing down in the search engine results. Facebook levels the playing field somewhat, and while those large companies may get more play in their chosen demographic’s feed, you’re at least still on the field.
Start with a budget of about $10 per post, and ramp it up if you aren’t getting enough hits. Make sure you’re selecting the right demographics for your listing, and change your ad for the same listing with each demographic (in marketing, this is called segmentation). For example, if you are listing an apartment for students, you’ll want to write two posts for two age groups – one for the students, one for the parents. You would create the post just as you usually would for your company page, and then hit “Boost This Post” once it is posted. Then, select your demographic information and your dollar amount. Choose your most attractive property photo for your ad; posts with photos have much more significant engagement across all platforms than posts without graphics.
Tracking your Facebook ads successfully
Next, you’ll want to be able to differentiate who is hitting your site from which Facebook ad, which will give you the information as to what is working and what isn’t. While Facebook’s Business Manager offers helpful analytics, you should also follow Facebook’s instructions to place a “conversion pixel” on your website to allow for more granular tracking in Google Analytics. Side note – if you don’t have Google Analytics enabled on your site, do it now. It will not only tell you how your Facebook ads are performing, but how everything on your site is performing. It also allows for tracking of other social networks under the “Referrals” tab.
Cross-post on other social media networks
Don’t give up on other networks entirely – you can cross-post your carefully crafted Facebook posts to any other social media network with tools like Hootsuite. Twitter now lets you post photos without any penalty to your 140 character count, so your posts may need some shortening for Twitter but not much. If you’re putting in the effort for Facebook, you may as well squeeze some extra juice out of other social networks. Google+ helps to drive up your search engine optimization, so don’t leave it off the list. Ideally, you should be using Facebook, Twitter, Google+ and Instagram for the most social media coverage.
To hashtag or not to hashtag?
This depends on the network you are using. A November 2016 study found that Facebook users don’t care much for hashtags, and if you are going to use them you should stick to one. You can get a little looser with hashtag use on Twitter, which makes sense since Twitter profiles are (for the most part) public and they are used more for content discovery than they are on Facebook. Still, two appears to be the current upper limit for hashtags before user engagement starts to drop off on Twitter. Since the best strategy for a time-pressed landlord is to focus on Facebook, pick one hashtag that best represents your post, and cross-post that update to all channels. Ritetag is a free tool that helps you find the best hashtags instantly with very little research, and it integrates with most social media management tools. Use of hashtags on Instagram, however, is very necessary and a completely different ballgame.
Instagram – a hit with millennials, a pain to use for marketers
Instagram actually pulled ahead of Twitter in terms of percentage of the American population using the channel in 2016. And it’s not a small gap – 32% of online adults use Instagram, where only 24% now use Twitter. 59% of those adults are 18-29, with a fairly even spread between income levels.
That’s exciting, right? Not so fast. Instagram will take more time for you to use, but the effort is obviously worth it if any of your properties have millennial appeal and are lagging in interest with more traditional and Facebook marketing. Unlike any other social network, you must post to Instagram with a mobile device such as an iPad or smartphone, and you can’t use a tool like Hootsuite to post directly to Instagram. The easiest way to do it is to compose your Instagram update in a tool like Hootsuite, then cut and paste the post on your mobile device and post to your Instagram app. Instagram is almost entirely visually oriented, so attractive property pictures are an absolute must. You should also use a tool like Canva to include your logo and website on the image for branding purposes.
You also use RiteTag and Instagram itself to research a set of 10-20 hashtags, some of which should be local, to use with each post. This is because hashtags are the only way to find content on Instagram, unlike any other social media channel. This is why it’s easier to compose your update in a tool like Hootsuite, because you can cut and paste your hashtag set. You should also add a couple of individual hashtags that are relevant for specific listings to each post. If, for example, you have a property in the Annex, you would include #Annex on your post.
So why all this effort for social media? More people use social media than any combined numbers for local, more traditional advertising methods. As we’ve seen in the study, people with higher incomes use social media. And most importantly to cash-strapped landlords, it’s far cheaper than pay-per-click advertising with Google and other traditional methods of advertising; you just have to be willing to put in the time.
Justin Maloney, our office manager, is the next member of our team we’d like to introduce you to. Justin is one of three Maloneys working with Highgate, which is very much a family-run business. His father Brian and brother, Jonathan, have key roles in the business.
From academic to cornerstone of family business
Justin has been working at Highgate for just over four years, managing accounts payable and client communications. He’s even had a hand in some of our marketing efforts, such as writing copy for the website and other content creation. Since Justin is nearly always in the office, he usually deals with our clients who call in with questions.
Justin was originally on an academic career path, with eight years of postsecondary school. He spent four years in a general college program with a specialisation in science, and four years at University with an undergraduate degree in psychology. He has also taken a paramedics course. When he was trying to decide between a professional degree to become a doctor or a lawyer, his father and brother talked him into helping to run the family business instead.
“If I became a lawyer or a doctor, my expenses would have been very high and my revenues would have ended the day I stopped working. This way, I get to contribute to the family business, and have a part in that legacy. I’m building my future with my family.”
Working with Highgate is rewarding to Justin
Justin enjoys all of the daily challenges that come with the job, and loves that he’s working with family. He’s seen the business grow significantly since he started four years ago. Project implementation and getting things off the ground is one of the more rewarding parts of the job, as is getting to know the clients Highgate deals with on a daily basis.
Justin is all about self-improvement, and sees his career as another tool to help him on this continual journey. “This job helps me to grow as a person, teaches me what I am capable of, and refines my skills on a daily basis.”
We’re rolling out the red carpet for new clients at Highgate Property Investments this month with promotions for home buyers, sellers and landlords seeking property management services. While we can go on about how great we are in our marketing, the only way to really sell our services is to show you what we can do for your bottom line. (more…)
Toronto and surrounding areas, particularly North York, have a strong market for renting to students. Residences at universities and colleges are much more expensive than renting a room in a house with other students, particularly at institutions where students are required to purchase meal plans in residence. (more…)
According to the latest Toronto Police crime statistics, there were just over 5,800 break and enter crimes reported so far in 2016. While this is low considering the amount of dwellings in the city, it goes without saying that better security will keep your tenants – and your property – safe. As with any business decision, you have to weigh how much you want to spend on it against the risk.
Get solid locks with deadbolts
Locks with deadbolts are vastly superior to other forms of locks, and a deterrent to break ins. While they are expensive, they are worth the investment and prospective tenants who are concerned about security will notice them.
Don’t forget the lights
Whether or not you choose to install a security system, motion-activated lighting in potentially dangerous areas, such as a side entrance or a rear patio, can act as a deterrent both for potential threats to your tenants and threats to your property when it is vacant.
Should I invest in a security system?
The answer to this really depends on what type of rental property you have and how concerned you would be about false alarms. If you have a luxury property, the answer is an automatic yes. High-end tenants will require a security system, usually with video surveillance, and your interests are also best served by having one.
If you have a basement apartment, high-quality locks and good lighting may be enough. In any situation, your insurance company may offer a discount on premiums for having a security system installed – usually not enough to offset the cost, however.
The potential for false alarms is the greatest deterrent to installing a security system. If you install one, make sure your lease agreement clearly outlines that your tenant is responsible for the costs of any false alarms they may trigger and the security of access codes. Multiple false alarms can earn you fines for thousands of dollars, and your tenants won’t care if you are footing the bill. Education can help here too – make sure you run through the security system carefully with your tenant prior to move-in day, and revisit it once annually to ensure they know how to use it.
You may also want to check out this map of crimes in Toronto from 2004 to 2001. Click on the “Break and Enter” selection. If your rental property is in a high-incidence neighbourhood, you will want to factor this into your decision too.
What if my tenant wants to install a security system?
If your tenant wants to shell out for a security system, it does save the cost for you while they are leasing your property. However, your tenant still must provide you with access codes and notify you if they are changed. Additionally, a change should be made to the lease agreement holding the tenant accountable for any costs arising from false alarms, since you will be responsible for those costs no matter who is paying the bill for the system.
What about when my property is vacant?
Vacant properties are more prone to vandalism, especially if measures aren’t taken to make them look like they aren’t vacant. To find out what is required for security, contact your insurance company – this is important anyway as you may have to have certain systems in place in order to not take out vacancy insurance between tenants. Usually, they will recommend motion-activated lights and good locks, but it’s best to ask as they may have specific requirements.
Security for the holidays
While you are on holiday rounds to visit tenants, find out if they are planning to be away, and offer to bring in mail if it may accumulate out front if you have the time to do so and they don’t have plans for friends or family to perform this task for them. Ask them to let you know if they are going on vacations longer than a few days throughout the year so you can keep an extra eye on the property – technically, they don’t have to, but if they do both your property and their belongings will be a little safer.
December is here, and that means all of Toronto is getting prepped and ready for the holidays. If you’re looking for something to do with family or friends to get into the spirit, we’ve rounded up events that are inexpensive or free for you to enjoy throughout the month. If you have tenants who are new to the city, you may want to email them this guide to help them navigate through the many events on offer in Toronto and the Greater Toronto Area this month.
Toronto Christmas Market
November 18th to December 22
This holiday tradition in the historic Distillery district has been ranked one of the top Christmas markets in the world.
Find out where to find a tree farm in Toronto or the GTA where you can get an Ontario farm-grown local tree to trim. Choose from harvesting your own on a small farm or visiting a larger farm with a petting zoo and interpretive walking trails.
Anyone who owns a luxury rental property in Toronto or has been thinking about buying one has probably been following the not-so-illustrious career of “professional tenant” James Regan. In case you haven’t been, here is the sordid tale. Regan has rented three high-end Toronto properties and in each case, has nefariously used legal loopholes to not pay rent and continue residing in them. He was finally charged with something – a physical assault on one of his former landlords – this past week.
While most of his landlords have managed to get judgements against him through the Ontario Landlord and Tenant Board, it’s unclear if any of those funds will be recoverable since Regan appears to be a con man without a cent to his name – even if his appearance belies something different. Fixing the regulations on what tenants are allowed to get away with will take years, if it is even ever addressed by the government. Unfortunately, it’s up to landlords to properly vet rental applicants to keep from getting into this situation in the first place. So how can you do this to make sure your luxury property is actually making you money instead of embroiling you in a legal battle?
Make sure you get the security deposit before the tenant moves in
Most “professional tenants” will at least come up with the security deposit before they start stiffing you on rent. Not so with Regan. In each case, he came up with some reason that he was waiting on money and somehow managed to weasel the keys out of the landlord. This is a fairly simple thing to combat – no money, no keys. Anyone who checks out on a rental application for income should be able to come up with the money, especially for a high-end property. Many high-end tenants are in business themselves, and so will understand the rule.
Look out for the overly charismatic, well-dressed charmer
People with money don’t always dress up. A guy in his twenties wearing a hoodie and sporting a full beard could easily be Canada’s next tech mogul – and this will check out on his rental application. In some cases, the less-employed spouse will be doing the apartment hunting because the primary income earner is too busy during the day. If you have someone showing up dressed impeccably and wanting to be your best friend during a typical workday, this should set off alarm bells in the high-end rental market.
References, references, references
It goes without saying that a tenant looking to rent a high-end property should have a solid source of high income and either rental references or proof of owning their own property in the past. A thorough credit check and income verification with an employer should be enough to verify income and ability to pay the rent. Someone like Regan will try to explain away bad credit, provide false references for income verification, and offer excuses as to why they can’t provide information. You are allowed to refuse to rent to someone if they refuse to let you do a credit check. If they refuse to give you their Social Insurance Number, which can be a valid privacy concern, you can still run a credit check.
Hire a property management company
If you are renting a property out for thousands of dollars per month, you want a professional to handle your property. Chances are that you are a busy person yourself, and your rental property is an income-generating investment, not your full-time job. An experienced property management company like Highgate can sniff out tenants like Regan in the application process, preventing them from moving in at all. If anything, our fees pay for themselves as insurance against tenants like Regan. While having us manage your property isn’t a guarantee against non-payment of rent by your new tenant, we will only place highly qualified applicants in the property and reduce the chances significantly that this will happen.
If there are issues with a tenant, we act as a firewall between you and the tenant so they can’t prey on your sympathies or bully you into yet another month of not accepting rent. We have legal means at our disposal should tenants not pay rent, and will swiftly take matters into hand for non-paying tenants so that they can’t drag the process out longer than they are legally allowed to. We are also experts at marketing higher-end properties and successfully manage a number of them.