Maximize Your Rental Unit

These days, I'm running into two different kinds of buyers. One type of buyer, whether we're talking about a couple or a single person, wants to buy a house, but they are finding affordable houses in the neighbourhoods they would like to live a challenge to find. So, they would like to rent out a portion of their house, whether it's the basement or another part of the property. That way, they can help pay down the mortgage or pay for some of the renovations that may be required on the house in the years to come. I also come across the condo buyer who either wants to buy a condo as a real estate investment to rent out or as a buyer who has bought a condo but is going to be moving to Vancouver or Europe or Asia for a few years and needs to rent it out while away. Whether it's a condo or a part of your house, there is a lot of rental questions coming my way as a real estate agent and as someone who owns rental properties. Any one with a computer will know prices have gone up a lot in the last 10 years in Toronto, but rents have gone up too. And the vacancy rate in Toronto still makes renting fairly easy if you are priced right and are in a decent location. So here are some tips for those looking for renters: 1.THE SITES WITH MIGHT: Probably the best new web site to find renters would be pad mapper. (www.padmapper.com). The layout allows you to search a map of the city to see what rentals pop up in different neighbourhoods. It's like a GPS for rentals. If you are using a real estate salesperson, the MLS is still a great way to draw in renters, particularly for condos. If not, standbys like Craigslist and Kajiji do a pretty good job as well. And if you are feeling adventurous, and have the money to furnish your rental unit for short term use, then give air bnb for Toronto a shot. It's incredible just how much travellers use this service all over the city right now. You do have the potential to make more money, but you have to put in more work. 2. TENANT REVIEW. Depending on the price point of your rental, your potential tenants may carry some valuable information when they come to see the unit. They may bring their own credit reports, employment letters and references. I often have an application form ready for potential tenants to fill out. At the very least, I would ask for the past landlord who you can call and an employer to make sure they can pay the rent. If you are going through a real estate salesperson and the MLS, they will require credit checks, references, letters of employment and past landlords. It will cost you the equivalent of one month's rent, but the the prep work and the advertising will be done for you. 3. SPEND MONEY ON THE RIGHT STUFF. Sometimes, when you obtain a property, beit a condo or a unit in a house, things could look a little dated or scrappy. If you are going to do a reno, focus on the kitchen. That's the place the renters are going to judge the most. If you can swing it, make sure you have storage, and good appliances. Stainless steel is always a good option, and can be a lot more affordable than they used to be. White gets dirty fast. If you are renting a basement, make sure there is no musty smell. Buy a dehumidifier for your tenant, if you must. They will be happy, and it will keep your basement healthy too. Finally, use good paint. Cheap paint needs too many coats. Good paint will cost more, but really save you time and you'll need less of it. 4. BE NICE BUT FIRM. Most tenants are decent people. If you treat them with a little respect, they will usually return it. Salt the walkways in the winter. Keep the thermostat at a decent level, and attend to problems promptly. If tenants try to break the terms of the tenancy, be firm and let them know that there are some things that are not negotiable. 5. DO YOUR RESEARCH. Check out with other units in your area to see the price point you should rent. Your unit won't budge if it's overpriced and you could miss a month or two of rental income if no one comes knocking. Also, keep in mind that January and February are not the best moving months. If you can swing it, wait until the spring, summer or fall to rent out your unit. If you follow most of these suggestions, there is a good chance you will find quality tenants and make the most for your apartment. Yes, rental units can be tough to manage sometimes. Pipes will burst on Christmas Day. Your tenant will get a cat stuck behind the radiator or the heating system will break down on the coldest day of the year. All of these things happened to me! Problems will pop up, but most of time, it's fairly easy and you make money with minimal amount of work. And that money can be put to good use: You and your mortgage!

First Time Buyers: They're Back!

I'm not sure they were ever really gone, but it seems as we move further into 2013, first time buyers are coming back to the real estate market. After crabby reports  on the slumping prices in Toronto in the second half of 2012, first time buyers are putting up their mitts in bidding wars for houses across the city.  

And if you are one of these first time buyers, it may feel like you just can't catch a break. No one could use a drop in the value of real estate more than someone who would like to buy their first place. They have every thing to gain from a price drop and nothing to lose from one.  And though there has been a little weakness in certain segments of the condo market in Toronto, first time buyers remain in a competitive price range, especially when it comes to houses. In the last two months, I have had more competition in the first time buyer housing segment than any other. 

Not only are they in a competitive price range, but first time buyers worry that Toronto will become too expensive, and they'll get priced out of the housing market. On the flip side, they are concerned that Toronto is at it's real estate peak. After all, they have a lot to lose if the market heads south, especially if they have just bought a property. 

Yeah, it may seem a little grim, but here's why some Toronto first-time buyers are not feeling so glum:

1. Yes, houses are competitive, and there can be bidding wars to buy them, but they are great investments. There are only so many left in this city, and at some point, first time buyers won't be in the price range to buy houses in Toronto at all. In the near future, buying a house for a first time buyer will simply be out of reach. But it isn't yet. Even though it is in a lot of other cities, like Vancouver.

2. Condos are still affordable. So, maybe houses are already out of reach for some first time buyers, or they would prefer the ease of a condo. If that's the case, there are a lot of condos to choose from. But do pick wisely. Though the larger condo developments may seem cheaper, they often do not increase in value in the same way as a townhouse or a midrise or lowrise.

3. Rates are good. I know we keep hearing this all the time, but it's true.  Plus, renting isn't much better than buying. Yeah, there are those who think you can rent and invest and make/save more money than if you buy, but I don't believe it. Rents have done a pretty good job of keeping pace with the rise of house prices. In fact, some can carry a mortgage with the rent they pay. So let's say you currently pay $1500 in rent.  If you put 5% down or $15 737, you can have a purchasing price of $314 733 with that $1500. Then you start to build equity.  Of course, this is all with what the lenders are offering now, according to Joe Sammut at Mortgage Architects. This can change. And it does take time to build enough of a nest egg to cover a down payment and some of the closing costs. At the end of the day, though, once you buy a home with a 25 year mortgage, you pay the same mortgage every month for 25 years with a variation on the interest rates only. Rents go up.