Buy low, sell high – this single mantra has been a constant in the lives of millions of stock market investors. Knowing when to offload your resources – whether it be stocks or rental property – can mean the difference between short-term financial gain or a major long-term income stream. (more…)Read more
The first quarter of 2017 has started off on a strong note in the Toronto and GTA real estate market. According to the Toronto Real Estate Board (TREB), both sales activity and average prices have both risen from its 2016 numbers. Despite a rise in sales, supply problems continue to plague Toronto and the GTA. Demand for housing is expected to grow for the rest of the year, especially from first-time buyers.
January 2017 – New year, same supply problems
The beginning of 2017 continued where the previous year left off – sales activity saw an 11.8% rise over the previous year, with 5,188 transactions compared to 4,640 in 2016. This rise was particularly strong for condominiums and apartments, and less so for low-rise homes.
Supply continued to be a problem within Toronto and the GTA, with new listings seeing a significant drop from 2016. January’s new listings were down 17.6% from January 2016’s numbers. Demand for housing is expected to continue to grow significantly, but it is feared that many prospective owners will struggle to find homes that meet their needs.
February 2017 – GTA households see home ownership as a long-term investment
Sales continued to rise in February, seeing a 5.7% year-over-year increase with 8,014 sales compared in 7,583 in 2016. Low supply numbers have led to a significant increase in sales price, with the average price rising by 27.7% year-over-year.
Demand for housing continued to rise throughout February, unmatched by the falling supply – 2017 experienced a drop of 12.5% for new listings. This phenomenon most likely means that current Toronto and GTA homeowners see owning real estate as a worthy long-term investment. According to a recent survey, TREB saw an even split in first-time buyers and current homeowners looking to purchase real estate in 2017 – meaning demand for Toronto and GTA real estate continues to grow for all types of housing.
March 2017 – New listings up amidst potential policy shakeups
March saw TREB urge against a new provincial tax on foreign buyers of real estate in Ontario, as the Board thinks it would not address the supply shortage currently facing Toronto and the GTA. The supply of Toronto area real estate has reached a 15-year low in 2017, and TREB has pledged to continue providing in-depth analysis on the issue.
Sales once again rose in the month of March, this time growing by 17.7% year-over-year. After a disappointing drop in new listings during the first two months of the year, March saw a much needed 15.2% rise in new listings. This doesn’t mean that the market is out of the woods yet, as the new listings growth is still lower than needed to compete with the sales growth numbers.
All in all, the first quarter of 2017 has proven that the real estate supply problem facing Toronto and the GTA is continuing to grow, which continues the trend of raising real estate prices.
Partnering with a friend or family member to purchase a rental property can seem like an attractive prospect, especially with rising real estate costs in Toronto and the GTA. Going in on a rental property with a partner can make it a more affordable and potentially rewarding venture, but with it comes a significant risk. Before making any hasty decisions, it’s important to take into consideration the legal implications of a joint venture partnership. (more…)Read more
If you are a landlord in Ontario, you technically cannot put a “no pets” clause in a lease or rental contract under the Ontario Residential Tenancies Act. Thankfully, most tenants are responsible pet owners, and this is usually not an issue. However, if you are set against the idea of animals on your rental property, there are exceptions to the rule.
You can refuse to rent to pet owners – but should you?
The Residential Tenancies Act only applies to people who are renting your property. You are allowed to refuse to rent to people who own pets, but you are not allowed to do anything about it if a current tenant acquires a pet unless they fall under specific exceptions. The best practice is to allow pets, especially if the prospective tenants seem like responsible pet owners, since a high percentage of renters own pets and you could be screening out responsible, long-term tenants if you don’t allow them.
Exceptions to the rule: Damage, excessive noise, allergies, and condos
Under the current Act, the only circumstances in which you are allowed to evict tenants who own pets are if the pet causes severe damages to the property, disturbs other tenants with excessive noise, or if other tenants in the building are severely allergic to the animal your tenant owns. Make sure you take timestamped pictures of the property right before the tenant moves in, paying careful attention to door frames, doors, and carpeting so that you can prove damages if you need to.
Condominiums with agreements which stipulate no pet ownership are an exception to the Act, as these agreements override the powers of the Act. If you are truly concerned about pets in a rental unit and haven’t yet purchased your first rental property, look for condos with “no pet” clauses – just make sure you are also buying into a condominium which allows you to rent the unit.
Ensure damage caused by pet is covered in contract
Your rental contract should stipulate that any damage beyond normal wear and tear is the responsibility of the tenant. If they have a pet, you may want to further specify that any damage caused by the animal (e.g. claw marks in door frames, urine stains on carpet, etc.) is the responsibility of the tenant so that they are aware that they must pay these costs.
Consult with other tenants before renting to new tenants with pets
If you have a multi-unit property in Toronto or the GTA, ensure that other tenants don’t have allergies to the animals that your prospective tenants have before you sign a rental contract with them. This will prevent the loss of trusted tenants and/or save you from having to initiate an eviction process shortly after the pet owners move in if other tenants have severe allergies.
Tenants must take care of pets and there are limits on numbers
The Residential Tenancies Act does provide some small relief for landlords in that it requires pet owners to properly feed, clean and care for their animals. Failure to do so is an “illegal act” and is grounds for eviction. While feeding and caring are hard to prove on the landlord’s part, unless there is obvious neglect, it will be very apparent if the animal is not clean. While the Act doesn’t cover the number of pets tenants are allowed to have, local animal control bylaws apply, and you can drop a tip to the agency responsible for animal control if your tenants are exceeding those numbers.
Pets are usually not a major cause of concern, beyond minor damages – which you can clearly lay out in your contract as being the responsibility of the tenant – or the occasional bad actor who will own too many pets or allow them to become a disturbance. There is always risk in being a landlord – if you want to mitigate it, hire a professional property management company like Highgate to screen your tenants and keep an eye on the property.
It’s something that no landlord wants to do, but occasionally it is necessary to evict a tenant.
Evictions are governed under the Ontario Residential Tenancies Act. The Landlord and Tenant Board has put together a summary document entitled How a Landlord Can End a Tenancy which is a simple explainer for situations in which you can evict a tenant, and how each must be dealt with under the Act.
Rent increases are necessary to keep pace with the rate of inflation on the costs of maintaining your rental unit. Annual rent increases should be built into each rental contract, and they have to be in accordance with Ontario Ministry of Housing guidelines – in most cases.Read more
It’s a fact of being a landlord in Ontario – at some point in your life, no matter how careful you are about screening tenants and collecting payments, you will likely end up having to deal with the Landlord & Tenant Board (LTB). The tenant may change the locks, not pay rent, or perform some other action that needs to be arbitrated by the Landlord and Tenant Board. Here are some tips for navigating an LTB matter.
The Landlord and Tenant Board is responsible for arbitrating disputes related to the Ontario Residential Tenancies Act, and it is an Ontario government agency.
- Determine if your case is eligible for the LTB
In order to qualify for arbitration by the Landlord & Tenant Board, you need to be sure that you have properly established a relationship as a residential landlord and tenant. For example, if you are getting a divorce and you are trying to kick your spouse out of an apartment you are both renting, that would not be an LTB dispute, but it would be a matter for family law court. A rental contract is usually needed to prove a landlord and tenant relationship.
If you are unsure, you can apply to see if your matter falls under the Residential Tenancies Act for a $50 fee.
- Filing a matter with the Landlord and Tenant Board
You will either have to respond to a complaint a tenant has filed against you with the Landlord and Tenant Board, or file one yourself. In either case, you may not require a lawyer if the matter is straightforward, such as the tenant not paying rent. However, it is worth noting that the current wording of the Residential Tenancies Act and the appeals process at the LTB is currently unfairly weighted towards tenants, so it is worth consulting a lawyer to see if the cost of representation is worth what you would recover if the LTB rules in your favour, particularly if rent in arrears or damages have already run into thousands of dollars and could potentially run up even higher during the lengthy LTB process.
The four most commonly used forms can be e-filed, and you will receive a small discount on the filing fees if you e-file. If your form isn’t on that list, you will have to download it and pay the full fee to file it by mail or in person. It is common to ask for filing fees to be paid if you are filing for non-payment of rent; if nothing else, this can be used as a negotiation tool during your hearing or mediation. When filling out the application, it is important to keep it fact-based and not to embellish with any personal attacks unless they have specific relevance in the case.
There will usually be an offer to settle the matter through mediation. If it can’t be settled through the mediation process, the Board will schedule an adjudication hearing. Both are usually scheduled within 25 days of a landlord filing the application.
- Treat the Landlord and Tenant Board like a courtroom
When you appear at the adjudication hearing, the experience is very similar to Small Claims Court. Your case will appear on a docket for the day, and you will be given instructions as to what time to appear. You will be in the same room as other people who are also going before the tribunal with their cases on that day. If your hearing is scheduled towards the end of the day, there is a chance that it could be pushed off to the following day, so make sure you build that possibility into your schedule.
Treat the tribunal adjudicator with the same respect that you would treat a judge in another court. Do not speak directly with the opposing party unless so directed by the adjudicator, answer the adjudicator’s questions directly and don’t offer any emotional pleas. Answer all questions with facts about the case only, and don’t embellish.
Once the adjudicator has heard both parties, they will make a decision. If they don’t make it on the spot, they will usually come to a decision within five days. If they require additional documentation or other items, they will ask for them to be submitted before making their decision. This is why it is important to include all relevant documents, including rental contracts, a record of payments made and not made, and so on in your initial filing. The decision the adjudicator comes to is referred to as an Order.
- After the Order is Issued
When the Order is issued, both you and your tenants have a right to either have the LTB review or appeal the Order. A non-paying tenant is likely to use the appeals and review process to buy more time. You both have 30 days to either appeal or order a review. At this point, it is advisable to bring in a lawyer if you aren’t already using one to ensure that the process doesn’t drag on longer than it should and that you are adequately represented. You can apply to the Landlord and Tenant Board at no charge if the tenant fails to meet conditions of an Order for further rulings to
Dealing with the Landlord and Tenant Board is actually a fairly simple process – file your application, show up for mediation or the hearing, and either have the situation resolved or it goes to appeal. However, it can be stressful for busy landlords who don’t have much time to take out of their work week. Hiring a lawyer can help you alleviate this stress, and is often worth the money.
If you want to screen for tenants in the future who are less likely to land you in front of the LTB, consider hiring a Toronto property management company like Highgate. We know what to look for and can also help you ensure that your property and terms are in compliance with the Residential Tenancies Act, reducing the possibility of tenant complaints. Give us a call today to find out more.Read more
Ensuring that your property is accessible for the disabled adds an extra layer of appeal for marketing. An accessible apartment isn’t only attractive for those with a disability that prevents mobility, but for a growing population of seniors in Toronto as well. In addition, under the law, you must provide accessible housing to tenants who are disabled, except in the case where refitting the property would cause undue hardship. But there are costs associated with such a renovation.
Renting to people with disabilities – what your responsibilities are
Under the Code, it is against the law to refuse to rent to a tenant because of a visible or invisible disability. You also must have reasonable accommodation for their disabilities in the housing unit. However, in a practical application, this can pose some issues for you – a non-accessible apartment can cost thousands of dollars to remodel to make it accessible. If you are a small landlord with one or two properties, you can argue under the law that this will pose an undue hardship. The American Disability Association estimates that renovating a bathroom to make it fully accessible can cost up to $9,000. But you don’t have to go that far to make a property accessible.
Start with minor alterations to make it senior-friendly
Performing minor renovations with seniors in mind can start you down the path to having an accessible property. Installing handlebars beside the toilet and in the tub and fall-proofing your home with various measures, including securing carpet on stairs, are things that will count towards accessibility if you need to take further measures in the future. When it is complete, you will have an additional marketing feature for your property. Here is a list of things to do to ensure your property keeps tenants safe from falls. Most are inexpensive and won’t take much time.
If your property isn’t accessible now, renovate to accommodate
Realistically, if your property isn’t accessible now, it doesn’t make financial sense to remodel it in the event that you have a disabled tenant. The best way to handle it is if the situation arises, renovate the property to accommodate their specific needs. For example, you may not need to make it wheelchair-accessible, but you may have to ensure items in the bathroom such as handrails and showers are modified to meet an individual’s needs.
If you are thinking about renovating your property to make it senior-friendly and accessible for the disabled, Highgate has a full-scale renovation crew ready to do it. Contact us today to find out more.Read more
An economist at BMO Capital Markets recently said that the real estate market in Toronto and surrounding areas is a bubble market. And while rising prices and dwindling supply have been a fact of life in the Toronto real estate market for the past couple of years, it has to be argued that we’re not in striking distance of where it is possible for the bubble to “pop”.
Definition of a housing bubble
A housing bubble is an increase in property prices which is driven by demand, usually due to limited supply. Once demand reaches a certain point, real estate speculators begin to enter the market, which can further drive up price. The bubble pops when demand decreases, either due to a new abundance of supply or other factors, such as a serious downward slope in the overall economy.
It walks like a duck, but doesn’t quite talk like one
It is true that prices and demand have risen significantly in Toronto and the GTA. Additionally, CMHC has put forward the theory that speculation is driving up the Toronto and GTA real estate markets. But a very important condition to the bubble bursting just doesn’t exist in the Toronto and GTA market – and that condition is decreased demand.
One of the only things that could decrease demand significantly is an increase in inventory, which isn’t likely to happen any time soon within the 416 area code. The boom in the GTA is a direct result of rising prices in Toronto pushing buyers into a cheaper location – many of these buyers would prefer to live in Toronto to avoid long commutes to work. The only place we can really see expanded inventory is in surrounding GTA communities, as development in Toronto itself is limited by space. While demand may dwindle in the GTA once new builds happen in outlying communities over the next few years, that demand for a home close to work will always be there in Toronto itself. If anything, this will depress housing prices in the GTA slightly once new inventory is released onto the market.
Economy another potential external factor
If conditions continue with the status quo, the only other item which could affect the real estate market – and which would affect it no matter what the housing prices and demand were like – is a significant downward tick in the economy. The most recent outlook maintains that Canada’s economy is growing, with a slowdown in the real estate sector in Vancouver pumping the brakes a bit on growth. The elephant in the room is how many protectionist trade policies the U.S. is planning on putting in place in the next year with the renegotiation of NAFTA, although the current administration’s signals during Prime Minister Trudeau’s recent Washington visit pointed to Mexico, and not Canada, being the major target in NAFTA renegotiation.
So is the proclaimed “bubble market” really just regular growth in the Toronto and GTA real estate market? While the rise in housing prices and increased demand may make it look like a bubble market, the Toronto Real Estate Board (TREB) argues that the supply levels for real estate being at their lowest levels since 2000 is the critical factor in rising prices. It is predicting another year of double-digit growth in housing prices. So if it is a bubble, it’s going to keep on growing for at least another year.
The main concern of the Toronto Real Estate Board for the current market is how many buyers will get pushed out of the market with rising housing prices and new federal mortgage rules which put home ownership effectively out of reach for first-time buyers in expensive markets like Toronto – this is justifiable as these people may just move out of the area, instead of being future Toronto and GTA real estate homebuyers.
Those who can’t move will rent, making this market a hot one for those who have considered real estate investment in an income-producing property. Contact Highgate today if you want to find out how you can capitalize on these market conditions with a property management company and real estate broker built to serve current and future landlords.Read more
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.