Toronto’s Suburbs are becoming increasingly popular–and with good reason!
It was another record-breaking month for the Toronto Real Estate Market and the rest of the GTA. With conditions being as tight as they are in the city, it’s not surprising that properties in the suburbs are going fast–and fetching a pretty penny too! We ranked areas in the GTA according to their price increase, highest selling prices, largest sales increase, and least expensive.
The Ugly Duckling — Transforming an Unattractive Investment Property into a Beautiful Swan
If you’ve been itching to purchase an investment property in Toronto, then you probably know that pickings have been pretty slim lately. Move-in ready houses with curb appeal are often the subject of bidding wars and come with a hefty price tag. The thought of owning a property that will generate immediate rental income is ideal, however, after weighing the pros and cons, and taking price into consideration is it really worth it?
Enter the ugly duckling: The legal triplex that is in need of some TLC. It’s in a fantastic neighbourhood, however, it contains a unit that smells like several unappetizing meals were cooked in it and has carpet that dates back to the early eighties. Overall, it’s not a pretty sight, and you’re uninterested. These are signs of poor property management. Before you move on to the next house, consider this: The property wasn’t built with a smell reminiscent of burnt dinners past, and at one point, that carpet was new. The point is, if you ask anyone involved in property management, we can tell you about some of the most luxurious spaces that have been destroyed in a matter of months due to one bad tenant — we can also tell you have quickly we’ve cleaned them up and made them move-in ready by the next month.
If you’re willing to look past the cosmetic issues and focus on numbers, taking on a property that was poorly managed isn’t such a bad idea. This can often save you money on the initial investment, and after hiring a reputable property management to turn it around, you will then be able to increase the rent and earn a profit.
Signs Poor Property Management
1. Units Not Prepared For Renting – If the state of a unit makes you ask yourself “Who would want to live here?” after viewing it, then you know it’s been poorly managed.
2. Not taking accountability – If the previous managers blame the condition of the property on a bad area or bad tenants, they’re trying to draw your attention away from the real problem – bad management.
3. Vacancy – if there are six units, and two of them have been vacant for months, that’s never a good sign.
4. High Turnover – If the previous landlord couldn’t keep tenants because a) they were unhappy with the living conditions or b) they weren’t paying their rent, then those are both signs of bad property management.
As an investor, signs of bad management can mean dollar signs in the future. Unfortunately, you can’t change the location of a building or a property’s layout without major renovation. You can, however, change your property management company. It should be common sense to anyone that apartments should be clean, painted and livable by decent people’s standards if you want to rent them to decent people.
Returns on property investments shouldn’t require rocket science. Simplified, well-maintained properties yield great results. This includes responsible tenants who are properly screened, which results in higher rents, no vacancies and low-turnover. By hiring a reputable Toronto property management company, you can turn an ugly duckling into a beautiful swan, and attract the type of tenants you want to rent to. Toronto is a huge metropolitan city, and although there may not be thousands of investment properties to choose from, there are thousands of responsible, income-generating tenants to choose from. Sometimes the best returns are the ones that come from the most unexpected sources.
In recent news, you may have heard rumours that buyers were “treading more cautiously” as they entered the fall market. The opposite couldn’t be truer in Toronto. This morning, Toronto Real Estate Board President Mark McLean announced that Greater Toronto Area REALTORS® reported a record number of transactions for the month of September through TREB’s MLS® System. There were a combined 8,200 home sales reported for September 2015. This result was a 2.5 per cent increase compared to September 2014.
For the first nine months of 2015 TREB MLS® sales amounted to 80,331 — a record year-to-date figure. Furthermore, there was a 9.5 per cent increase compared to the first three quarters of 2014.
“We are on track for record home sales reported through TREB’s MLS® System this year. Barring a drastic shift in the economy over the next three months, total transactions reported by TREB Members in 2015 are expected to be at or near the 100,000 mark. This is a testament to the importance that GTA households put on home ownership as a long-term investment,” said Mr. McLean.
The MLS® Home Price Index (HPI) Composite Benchmark Price was up by 10.5 per cent year over year. The average selling price for all home types combined was also up by 9.2 per cent annually to $627,395. Growth in the MLS® HPI Composite Benchmark and the average price was driven by the low-rise market segments, including detached and semi-detached houses and townhouses. (October 5, 2015 –TREB)
Last week the Bank of Canada reduced its Key Lending Rate for the second time this year. Down to 0.5 per cent from .75 per cent, this move was in response to our ailing economy along with the slump in oil prices. With large banks and lenders preparing to follow suit, this leaves us to wonder what effects this will have on Canadian Housing Markets—particularly red-hot markets located in prime cities such as Vancouver and Toronto. The rate cut has prompted mixed opinions from industry professionals, with some saying that this move is merely adding fuel to the fire while others believe that it will contribute to the healthy expansion of markets.
Lower interest rates will inevitably boost bidding wars in Toronto, with buyers now having access to additional funds. The city’s population will continue to grow along with the demand for real estate and, in theory, all the factors mentioned will cause housing prices to increase, resulting in a strong real estate market.
It can be, depending on who you ask. Lower interest rates could also mean a flurry of borrowing, driving consumers further into debt. The price to income ratio of housing might reach a point that no longer makes sense and the only thing in sight will be a correction.
Perhaps … Just about anything is possible.
No matter how you slice it, what goes up must come down, or at least stop—“How hard or soft of a landing are we in for and when will it occur?” Are the questions. We can follow reports and predictions from the top economists, however, we will never know for certain. What we do know is that Toronto and Vancouver didn’t magically fall into the spotlight. Although housing markets in both cities have been scrutinized by economists from across the globe and regarded to be overvalued by up to 20 per cent, both Toronto and Vancouver are supported by strong economic conditions, cultural diversity and population growth. Additionally, the Loonie being at a 5-year low will boost tourism–an industry which provides a significant amount of fuel for local economies in both cities. Assuming that none of the aforementioned will come to screeching halt, it safe to say that the prices of real estate in Toronto and Vancouver aren’t going to decline anytime soon and the likelihood of a crash or even a moderate correction is slim to none.
On a national basis, however, we can expect declines in the real estate markets located in cities where local economies were highly dependent on specific sectors, such as oil or even construction. While those cities are under pressure, the Canadian real estate market has been in great shape so far this year and is expected to stay on track.
No matter what city you’re located in, if you are considering taking advantage of ultra-low mortgage rates, it’s best to remember to calculate an additional 2—2.5 per cent into your monthly housing budget. This will act as a safety net and protect you against radical changes, especially for fixed term borrowers when renewal time rolls around.
Thinking about buying an investment property in Toronto? You’re not alone. For years, savvy investors have been buying, renting, flipping and selling real estate in Toronto. Historically Canadians have always leaned toward real estate as a key investment and according to a recent study by TD Bank, several professional investors also consider their home as an investment. Not only is investing in real estate is an excellent way to build a nest egg, it also offers the security of a hard asset that you are in control of. Whether you’re a seasoned investor or a millennial interested in buying your first rental property, there are a few key things that you should consider before taking that big step.
1. Set realistic goals and stick to them
Begin by writing down a simple plan that will remind you of your goals for property investment. Are you buying this property as a long-term investment to secure your family’s future and your own retirement? Maybe you’re interested in renovating a dated property to eventually sell. No matter what your goal is, make sure that you’re certain of your intentions and that it will help put money in your pocket after all expenses are paid.
2. Do your research
A common mistake first-time investors make is purchasing a property without conducting the necessary research. There is a wealth of information that can be found online, however, a consultation with an experienced agent who can share his/her own experiences can help you weigh the pros and the cons of purchasing, and come to the right decision.
3. Borrow responsibly
Educate yourself on financing. Taking out a second mortgage isn’t as easy as your first, and when buying additional property, a minimum down payment of 20 per cent is required. Talk to your broker or bank to determine how much you can realistically borrow. It’s good to be optimistic about your property’s income generating potential, however, when it comes to borrowing, biting off more than you can chew can add unnecessary stress and strain.
4. Home Inspection
Be sure to have the property inspected by licensed home inspector. This is especially important if you’re buying an older property. For advice on repairs or renovations, hire a contractor who you can trust—if you know of a friend or colleague whose home had recently undergone impressive renovations, ask to be referred to their contractor. You want to get the most out of your investment and by simply updating an older property, you not only raise its market value, you can increase your rental prices, thereby generating more income.
5. Hire an experienced and reputable Property Manager
Property managers can help you find suitable tenants. They can perform screening and background checks, as well as deal with any ongoing maintenance, repairs, or complaints. Property managers can offer useful advice in regard to pricing and marketing your property to maximize its appeal.
6. Stay Organized
Keep all of the property-related income and expense records organized and separate from your personal finances. When it comes time to file a tax return at the end of the year, you won’t have the stress of having to track down those reports amidst other piles of paper.
7. Location, location, location
You want to purchase a property in an area that is close to amenities, has a high Walk Score and is easily accessible by major highways, public transportation or both. Be sure to research other rental properties in that neighbourhood—property investing is a business and you should be aware of your competition. If the location is saturated with rental properties, particularly vacant ones, you should look elsewhere.
Trust your instinct. Don’t be afraid to walk away if the property doesn’t feel right or work for you, no matter how much time you may have invested in the process. The perfect opportunity will come your way–remember, when one door closes, another one always opens.
GTA Real Estate Sales Soar, Toronto Luxury Real Estate Market Hottest in the World
Peak selling season is off to a great start in Toronto, and judging by April’s figures, we’re in for one hot summer. In an announcement made last week by Toronto Real Estate Board President Paul Etherington, GTA REALTORS® reported 11,303 sales through Toronto MLS®. This is an astounding 17 per cent increase in comparison to the same time last year. New listings were up five per cent—a modest number, however, still an increase compared to last year.
The overall average selling price of a GTA home was $635,932, up 10 percent in a year-over-year comparison. The MLS® Home Price Index (HPI) composite benchmark, which estimates the price of a benchmark home with the same attributes from one period to the next, was up by 8.4 per cent over the same period—although the HPI saw a healthy increase, it did not leep up with the growth of the overall average selling price.
Source: Toronto Real Estate Board
The margin supports the recent buzz regarding Toronto as the “Hottest Luxury Market” with a significant surge in higher-end houses being sold. Luxury homes in Toronto acquire their name when their list price exceeds $3 million USD.
The demand for low-rise homes in the city is not being met, withrare new listings being snatched up by eager homebuyers. According said Jason Mercer, TREB’s Director of Market Analysis “Demand for ownership housing was very high relative to the number of homes available for sale in April. This situation is not expected to change markedly as we move through the remainder of 2015. Until we experience a sustained period in which listings grow at a faster pace than sales, annual rates of home price growth will remain strong,”
There were increases in the condominium market as well, which unlike detached homes in the GTA, are more accessible to buyers. The high activity in the Toronto Real Estate Market, as well as in the GTA is proof that people still consider real estate as a dependable, long-term investment.
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