In real estate, we sometimes refer to the rental market as the Wild West.  While it is heavily regulated, rentals involve a different and sometimes overlapping set of rules governing landlords, tenants and real estate agents.  This leads to confusion and differences in approaches to handling rental listings and reviewing and approving tenants.

If a landlord chooses to rent a property outside of the MLS system and not use agents to represent them or tenants, then things can get even messier.  There are dozens of free or paid sites for rental properties that operate outside of the purview of organized real estate.  With no real estate agent involved – and therefore not the same requirements on disclosure, honesty or consumer protection – there are lots of stories about scams and misrepresentation in that part of the rental market.

If the rental market as a whole is the wild west, then furnished rentals are the town where the sheriff is missing, the saloon is on fire and horses are running down people in the street.

Let’s talk about how furnished rentals work and the challenges inherent in such transactions.

More stuff, more money?

Furnishing a rental property seems like a fairly obvious way to make more money.  Put in a couch, a bed, a television and some dishes, then charge the tenant more each month.  Simple.

Except the furniture costs money, it needs to be maintained and oh, right, it actually eliminates a large portion of the tenants who would otherwise consider the property.  So, perhaps not quite that simple.

Many landlords are drawn to owning income properties because they can be relatively passive investments.  With the help of your trusty real estate agent, you find a tenant, they move in and rental income starts flowing.  Eventually they move out and the process takes place again.  It involves some effort each time a vacancy is coming up, but if the right tenant is in place, during tenancy it can be largely passive.

With furnished rentals, there is the additional challenge of having to manage both the initial furnishing of the property plus dealing with any issues during the tenancy.  If you’re renting an unfurnished property, you (or your property manager) will get calls if the fridge breaks or the AC stops working, but if their couch starts to sag or they decide they need a home office, it’s not your problem.  The landlord of a furnished rental has to deal with questions or issues related to the furniture in the property and the tricky question of standards often comes into play.

If you look around your home, you probably have some furnishings you’ll replace at some point, but only when you feel like it.  That pan that doesn’t have much of the non-stick left on it may still get used, and you just put a blanket over that stain on the couch.  It is a universal truth that when someone doesn’t have to pay for something to be fixed, their standards rise and their patience for waiting drops.

Given the additional challenges in renting out a furnished property, do many people do it?

It’s about 15% to 20% of the rental market.

As of July 17, 2026, there are 6,348 properties for rent in Toronto.  The vast majority of those are available unfurnished, with about 85% being listed as not coming with any furniture.  The remaining 15% are listed as either partially furnished or furnished.

Put another way, if you’re looking for a place to rent, you’ve got over 5,300 options in the city if you’re bringing your own furniture and about 1,000 if you want it to come furnished.

As is indicated by the existence of “partially furnished” as well as “furnished”, there is no universally understood definition of what a furnished place includes.  One landlord may describe a unit as furnished because it contains a bed, a sofa and a dining table. Another may provide furniture, linens, cookware, dishes, small appliances, a television, artwork and everything else a tenant needs apart from their clothing and toothbrush.  Those are not the same product.

There are many different attempts to establish what is being offered by using particular descriptions.  A fully furnished property logically has more than a furnished property, but what specifically?  Is a turn-key furnished property even more than fully furnished, or a bit less?  Where does partially furnished come into play?  Does that mean there is whatever the landlord let the previous tenant leave, or is it beds and couches, but not tables?

The issue of standards comes into play again here, because what is a fully furnished unit to one person may be woefully under furnished to another.  With no universally agreed upon definition of the differences between the types of furnished properties, misunderstandings and unmet expectations are commonplace.

To sum it up, the landlord has not simply rented a unit to a tenant.  In essence they have entered the hospitality business, just without room service or the tiny bottles of shampoo.

If we’re clear on the challenges of renting out furnished properties, the question becomes, do those landlords who take the plunge make a killing?

The few, the proud, the marginally more expensive.

Even if only 15% to 20% of the rental market are comprised of furnished properties, there has to be a reason in the form of additional rent for a landlord to take on the extra work.

When we look at the asking rent for the properties currently on the market that we described above, we see it isn’t much of a premium.

• Unfurnished rentals (5,347 of them) are asking an average of $2,762 per month.
• Furnished rentals (720 of them) are asking about 7% more on average, or $2,950 per month.
• Partially furnished rentals (just 281 of them) are actually asking about 4% less! Their average list price is $2,650, so about $110 less than the average price for an unfurnished unit.

This is just one snapshot of what we’re currently seeing in Toronto and we’d definitely urge caution before assuming that holds true in other markets or at other times.

In fact, the available Canadian data on furnished rentals are far less decisive than we would like.

Back in 2021, the good folks at Rentals.ca examined apartment and condominium listings and found that furnished units in Ontario had an average asking rent 8% higher than unfurnished units.  That’s pretty close to what we found in our review but when they looked at it on a per-square-foot basis, the difference was 14%.  Keep in mind that data was from early 2021 and COVID was still very much impacting the rental market.

Another data source comes from the website liv.rent, which reported that in June 2026, furnished one-bedroom units in Toronto averaged $1,929 per month, while unfurnished units averaged $1,970.  That’s a far cry from a 7% to 8% premium and in general, we believe that the relationship changes from month to month.

Statistics Canada found that furniture was included in only 4% of Canadian rents in its 2021 Canadian Housing Survey. The study also warned that rents are difficult to compare without accounting for differences in the property, location and everything included in the monthly payment.

In our experience, sometimes furnished units show a modest premium and sometimes they show a discount.  That does not mean that furniture has no value, but it does tell us that a straight comparison between all furnished and unfurnished listings can be misleading.

After all, the furnished units may be located in different neighbourhoods than where unfurnished units are located.  They may be smaller, larger, newer or older than what’s in the unfurnished rental market.  They may include utilities, parking or internet at a higher rate than unfurnished rentals, or they may not.

In other words, there is no reliable rule that says adding furniture increases the rent by 7% or any other convenient number.  Unfortunately, the market is seldom that cooperative.  We say “the” market, but make no mistake, the furnished rental market is fundamentally a different market than the unfurnished rental market.

Different tenants, different needs, different length of stay.

The type of tenant who is interested in a furnished rental is very different than someone interested in an unfurnished rental.  While there may be the occasional person who is open to either, it is typically a binary situation – either you have furniture or you need it.

In our experience, there are a number of different reasons why some tenants look for a place that comes furnished.

• Corporate transferees
• People working in the GTA on temporary assignments
• Newcomers who have not yet purchased furniture
• People completing renovations to their own homes
• Couples who have recently separated
• Students or faculty at nearby schools
• Tenants who expect to move again within a relatively short period

Renting a furnished unit is very much a temporary situation.  While there are many cases of renters being at the same place for years or even decades, this doesn’t happen in the furnished rental market.  While not all furnished rental units are available for short-term (one month or longer) rentals, they do share a prospective tenant pool in common with short-term rentals.

These renters may be willing to pay more for a furnished place because furnishing a home for a temporary stay makes little financial sense.  After all, buying a sofa, mattress, dining table and basic household supplies is expensive and so is moving them.

While there are definitely challenges with renting out a furnished property, it can be a smart approach if handled correctly and everything aligns.  We’ve helped a number of landlord clients with furnished rentals and we know the hurdles and how to handle them.  Whether it’s a prospective tenant asking if the landlord won’t just remove the furniture (completely or in part), the move in inspection and inventory report or the suitability of certain properties (and unsuitability of others!) we’ve dealt with it all.  If you’re considering renting out a furnished property, or you’re looking to rent one yourself, get in touch with us!

Spend enough time looking through real estate listings and eventually you’ll come across something that seems like it wandered into the wrong category.

• A sushi restaurant
• A convenience store
• A nail salon
• A dog grooming business

At first glance, it can seem strange to see businesses listed by real estate agents. After all, a business isn’t a house. You can’t inspect it the same way. You can’t compare it to the one down the street with the newer kitchen and the finished basement. You can’t walk in, admire the light fixtures and decide whether the family room works for Christmas.

Business sales live in a different world but that doesn’t mean real estate agents can’t be involved and in Ontario, they often are part of these sales. The rules around real estate trading are broad enough to include businesses, leasehold interests, fixtures, stock-in-trade and other goods connected with the operation of a business.

While real estate agents can sell businesses, the real question is whether they should do it.  After all, there is a pretty big difference between being allowed to do something and being good at it.

Let’s look at how selling and buying businesses through real estate agents works, starting with what’s actually being sold.

Wait, if there’s no land, how is it real estate?

One of the first and most confusing aspects of real estate agents selling businesses is that the businesses may not actually have any real estate attached to the sale.  How can real estate agents sell something without any actual real estate?

The current legislation that governs real estate sales in Ontario is called TRESA, which stands for the Trust in Real Estate Services Act.  Before all legislation came with pithy titles, they were more descriptive and the legislation that governed real estate up until a few years ago was called REBBA, or the Real Estate and Business Brokers Act.  As the name implies, real estate agents were also very much intended to be involved in the sale of businesses.

As of today’s date, (June 12, 2026), the MLS system has over 1,500 business for sale with real estate agents in the Greater Toronto Area, with about half of them located in Toronto.  These are businesses that don’t include property and are strictly business sales.  This article focuses on the business sale side of the equation as it is far less understood.  If a business does have a building or land included with the transaction, then the value and aspects of that land are considered in addition to the value of simply the business and its inclusions.

What’s your budget?  Actually, never mind, we’ll find you something.

If we exclude the 50 or so listings that are for sale for $1 – because the agent just doesn’t know the price to list it for sale at – then they range in price from $6,000 to up to $2.2M.  If that seems like a heck of a range, it’s because what is being sold varies tremendously.

At the low end of the scale, the business for sale has extremely limited assets and is most likely not making much money.  Typical types of businesses in the under $50K list price range are beauty salons, small cafes, small convenience stores, small medical practitioners (orthotics, optometry, etc.) and so forth.  The physical location is small, they have low value equipment or stock and what you’re buying is basically the fact that consumers are (presumably) familiar with the business at that location and may use it.

On the high end of the scale, you’re looking at businesses that have very large physical locations, with significant assets and reoccurring revenue.  Some examples of businesses in the $2M plus list range are 10,000 sf indoor playgrounds, countertop manufacturing businesses, established brewery restaurants and so forth.

Let’s get into the factors that impact the list price and value of a business.

The location is often the business.

The reason business sales and real estate overlap is usually pretty simple – the business is tied to a place.  After all, a restaurant is not just a collection of tables, chairs, ovens and saucepans. It is also the corner it sits on, the people walking by, the signage, the parking, the patio, the lease, the rent, the zoning, the landlord and the fact that customers already know where to find it.

Consider a hair salon with loyal clients, six chairs, trained staff and a lease in a strong plaza.  That’s not just selling scissors and mirrors, but an ongoing concern.  This is also true for a convenience store beside a school, condo building or busy transit stop, that isn’t just selling shelves, chips and fridges.

In many cases, the real estate component is not a side issue. It is the main issue.  This is true even if the business may not own the building or any land, as we’re discussing here.  While some businesses you see in your neighbourhood and near your work may own the property they operate out of, many are in fact simply tenants.  With such businesses, there is often lots of value in the commercial lease they hold with their landlord. If the lease cannot be assigned, the landlord does not approve the buyer, or the rent is about to jump to a level that kills the profit, then the “business” may not be much of a business at all.

Buying a business is not like buying a house.

 When you buy a house, you are mostly trying to answer a few big questions.

• Do we like it?
• Is it worth the price?
• Can we afford it?
• Is there anything wrong with it?
• Will it be good for us for the foreseeable future?

A business purchase has all of those questions, plus a bunch more that are much harder to answer.

• Does the business actually make the money the seller says it makes?
• Will the customers stay after the owner leaves?
• Are the employees staying?
• Is the equipment owned, leased, financed, broken, obsolete or excluded?
• Is the inventory included?
• Can the lease be assigned?
• Are there permits or licences that need to transfer?
• Are there supplier agreements?
• Is this a franchise?
• Does the franchisor need to approve the buyer?
• Is the business being sold as assets or shares?

That is where these deals can get messy. You are not just buying something you can see, you’re buying a collection of rights, relationships, records and assumptions.  While some of those things are valuable, some are not, and some disappear the minute the current owner walks out the door.

…and goodwill to all!

There’s a concept in business valuations that is either a critical part of the value or a way for a seller to push the price up well beyond what it is actually worth.   Let’s talk about “goodwill”.

Goodwill is a magical concept that comes into play when the whole is worth more than the parts.  It involves other nebulous concepts like reputation, presence and track record.  If you encounter a business that is selling (or trying to sell) for more than the value of what is being sold, then the excess is often ascribed to “goodwill”.  To be clear, that isn’t goodwill towards the seller from the buyer, it is positioned as an intangible but nonetheless valuable component of a business that the buyer must pay for in addition to the more easily quantified aspects.

Let’s think about a business that is highly transferable, such as a well-run franchise in a good location, with established systems, trained staff and clean books.  A business like this may sell for much more than the value of its parts, because it may very well be able to keep running without much drama after the sale.

Other businesses are really just the owner, wearing a business costume.  The clients come because they like the owner, the suppliers give good terms because they trust the owner, the staff stay because of the owner. The recipes, systems, relationships and daily problem-solving all live in the owner’s head.

If the seller is the reason the business works, the buyer needs to understand what likely happens when that seller is gone. A few weeks of training after closing may not magically transfer years of relationships, habits and local goodwill.  This is why “goodwill” is such a slippery concept.

Goodwill attached to a location can be valuable, goodwill attached to a brand can be valuable, goodwill attached to repeat customers, strong reviews, staff systems and consistent operations can be valuable.

Goodwill attached entirely to Frank, who has personally known every customer since 1997, is a different thing.  No offence to Frank.  Frank may be fantastic, but unless Frank comes with the sale, the buyer should be careful about paying too much for Frank’s goodwill.

Let’s get to the most real estate-y part of this whole thing.

 For many small businesses, the lease at the existing location is effectively what is being sold.  It’s not the paint colour or the cappuccino machine, or the cute logo on the front window.  All of these things can be done by a business owner at a new location, often for less cost.

The lease is what makes someone wanting to run a certain type of business in that specific location decide to buy an existing business rather than just start one.

When we work on behalf of our business buyer clients, there are lots of questions we ask about the lease.  Some of these questions are about how long is left, what the rent is, what additional rent or TMI is payable, whether there are renewal options, whether the lease can be assigned and whether the landlord has any right to change terms when the business is sold.

A cheap rent in a good location can create real value, while a short lease with no renewal option can destroy it.  Let’s not forget that a landlord who will not approve the buyer can stop the deal entirely.

There are often aspects in a commercial lease that allows only a very specific use for the property, so if you have plans on adjusting what the business you just bought does at that location, you may discover you can’t actually do it as per the terms of the lease.

Commercial leases are considerably more complex than residential leases, and there are far less protections on both sides.  If you make assumptions that the same rules apply to your commercial lease as you’ve experienced with residential leases, you’ll be in for a world of trouble.  You could buy the business then six weeks later be informed by the landlord that the building is being sold and your lease is terminated in 90 days.  You could encounter a problem with the HVAC system at your new premises, reach out to the landlord to get the AC working again and be told that replacing that system is entirely your cost, as per the terms of your lease.

In our work with landlord and tenants on the rental of commercial properties or the purchase and sale of businesses at commercial properties, we often see inexperienced buyers where they treat the lease in far too casual a fashion.  They talk about the equipment, the menu, the sales and the “potential”, then leave the lease review until later. That’s backwards, because if the lease does not work, the rest of the deal may not matter.

Let’s talk numbers.

Business listings can sometimes have a generous relationship with reality.  You may see phrases like:

• “Owner states sales are much higher.”
• “Lots of cash business.”
• “Great potential.”
• “Easy to increase revenue.”
• “Seller only works part-time.”
• “Expenses could be reduced.”

While all of that maybe true, buyers should not pay for maybe, and if a seller wants to be paid for business income, the seller should be able to prove business income. That means actual records, not just a confident conversation at the back table after the lunch rush.

A buyer should review tax returns, financial statements, point-of-sale reports, bank deposits, HST filings, payroll records, supplier invoices, rent records and utility bills.  Many small businesses have challenges with recording and reporting their financial transactions and that can make those businesses effectively unsellable.

This isn’t because potential buyers are being difficult, it’s because if a business is being sold based on profit, the profit needs to be supportable. If the seller says the business makes far more money than the records show, the buyer has a problem.

Actually, scratch that – it’s not just the buyer.  The lender has a problem, the accountant has a problem, the lawyer may have a problem. In fact, it’s likely that everyone has a problem, except perhaps the seller, who would very much like to be paid for income that was not properly documented.

Small time or big time?

One of the big components of a business sale that determines whether this is a simple, smaller sale, or a larger more complex sale is whether it is an asset sale or a share sale.

 In many smaller business transactions, the buyer purchases the assets of the business. That may include equipment, inventory, leasehold improvements, the trade name, website, phone number, that magical goodwill and certain contracts.

In other cases, the buyer may purchase the shares of the corporation that owns the business and those are not the same thing.

With an asset sale, the buyer may be able to choose the assets they are buying and avoid taking on certain liabilities. With a share sale, the buyer may be stepping into the corporation’s history, including contracts, tax issues, employee obligations and liabilities that may not be obvious at first glance.

There can also be major tax differences for the seller, so this is not the part of the deal where anyone should be winging it.  While we can help coordinate the process and make sure the right conditions are included in the agreement, the question as to whether an asset sale or share sale is better it very much lawyer and accountant territory.  We work closely with our client’s law firm and accounting firm when preparing for a purchase or a sale of a business, so if you’re considering either, talk to your people.

In addition to the real estate agents involved, business sales often involve the buyer, seller, two lawyers, two accountants, a landlord, a lender, a franchisor, suppliers and sometimes a licensing body. If no one is managing the flow of information, the deal can get bogged down very quickly and a good real estate agent helps keep things moving.

Business sales can absolutely involve real estate agents, but they should not be treated like ordinary real estate deals.  The buyer is not just buying furniture, equipment and a sign over the door. They may be buying income, lease rights, goodwill, staff continuity, contracts, systems and the hope that customers keep showing up after closing.

That requires more due diligence than a typical property purchase and if we’re blunt, it also requires a bit more humility from everyone involved.  We need to help with our area of expertise and not advise or interfere in other aspects.  The buyer needs to verify the numbers, the seller needs to prepare proper records, the lawyer needs to review the structure and documents, the accountant needs to look at the tax and financial side and so on.

Within our team we regularly work with clients who are looking beyond standard residential purchases and into investment properties, commercial opportunities and more complex real estate-related transactions.  If you are considering buying or selling a business where the location, lease or real estate component is a key part of the value, get in touch with us. We can help you understand the real estate side of the transaction, ask better questions, and connect the dots with the other professionals who should be involved.  Let’s talk!

The fine folks at the Toronto Regional Real Estate Board have released their 2026 Q1 report on the rental market.  The report focuses on condominium rental units, both condo apartments as well as townhouses, in Toronto, York, Peel, Halton, Durham, Dufferin and Simcoe.

Here’s a link to the full report if you want to check it out.

As always, we reviewed the data to see what’s worth noting.  Let’s get into it!

More…but also less.

The report shows that across the TRREB boundaries (the GTA and a bit beyond) apartment rentals rose about 11% year-over-year, from 14,800 leases in Q1 2025 to 16,400 in Q1 2026. In the same periods, listings rose 6%, from 22,600 to 24,000, so supply remained heavy enough to preserve renter choice and negotiating power.

Put another way, more places were rented in this first quarter of 2026 than in the first quarter of 2025, but we also saw a somewhat smaller increase in the number of places for rent.  If you combine those two things – an increase in demand, with a smaller increase in supply – you’d naturally assume that rental prices would be going up.

Instead, rents fell across every apartment bedroom type, which is a bit of a head scratcher.  Average apartment rents were lower year-over-year for bachelors, one-bedrooms, two-bedrooms, and three-bedrooms. The biggest winner (for tenants) is the one-bedroom average rent, which fell 4.1% to $2,246 from $2,343. That’s about $100 less per month that landlords of these units are receiving in rent.

Two-bedrooms fell 3.2% to $2,939, and three-bedrooms fell 2.7% to $3,757, so it seems like the bigger, higher priced rental units did better than the smaller, cheaper places.  This is likely due to the level of supply, as while demand for family-size units has only increased over the last number of years, developers have focused on the smaller, single person or couple occupancy units.

Renting out a place?  You’re probably in Toronto.

Another interesting aspect of the report is that Toronto still dominated apartment leasing volume.  Out of 16,365 apartment leases across all TRREB areas, the City of Toronto accounted for 11,411, or roughly 70% of total apartment rental transactions. Toronto Central alone had 8,783 leases, making it the core of the rental market with more than half of rentals taking place there.

York Region had meaningful apartment volume, but at lower average rents than Toronto.  York Region had 1,908 apartment leases in Q1 2026. Its average one-bedroom rent was $2,165, compared with $2,322 in Toronto Central. Two-bedrooms averaged $2,732 in York Region, compared with $3,186 in Toronto Central.

While York is often the home of the highest average priced property in the GTA (trading places with Halton on some months), the average price for a condo unit in York is comparable to the average in Toronto, so while landlords in York are getting lower rent, they also paid less for their units.

Ready to rent?  Consider a townhouse.

The final odd aspect that we found in the report was in the rental townhouse portion of the market.  While the level of activity was pretty stable when compared year over year, the average rent dropped considerably.

When we compare Q1 of this year to Q1 of 2025, townhouse leases were nearly flat, rising 1.7% year-over-year from 1,156 to 1,176. In the same time comparison, average townhouse rents fell overall, with three-bedroom townhouse rents down 7.5% year-over-year. This is contrary to the condo apartment segment of the rental market, which as we mentioned, had larger three-bedroom units see the smallest average drop in rental prices of all the types of condo units.

Our take on this is that tenants who were renting out townhouses were most likely to have seen the comparable cost of owning a place equalize over the past year.  As purchase prices dropped in many segments of the markets across the GTA, a tenant who was already paying considerable money to rent a townhouse began to see prices that would carry for similar numbers to their current rent.  It seems that townhouse landlords had to make their rental rates more attractive to continue to appeal to tenants for their property who might otherwise look to jump into the property market themselves.

Every segment of the market – whether it is rental or for sale, condo or freehold, entry level or high end – has its own trends, rhythms and cycles.  If you’re thinking about buying or selling, renting or renting out, then you need to work with agents who understand the market you’re focused upon.  Get in touch with us to hear our thoughts on how to best move you forward!

While real estate markets shift over time, we’re firm believers in the idea that owning real estate is a foundation of wealth if you do it right.  That may mean making sure your own home is a good investment, but it also definitely includes income properties.

Here on the Refined team, we love income properties.  Love ‘em!

• We love seeing a mortgage go down each month, paid for by tenants.
• We love seeing the property appreciate over time.
• We even love overseeing renovations that add value and allow us to charge higher rents and attract better tenants.

It’s because we love income properties that we get excited when we start working with a client looking at buying one.  If you’ve been considering buying an income property, we thought we’d share a quick way of assessing different income properties.  It’s called the capitalization rate, or cap rate for short.

Nice cap.

The cap rate for a property gives you a number (expressed as a percentage) that tells you how long it will take for the rental income from a property to pay off the purchase price.

The higher the number, the quicker the purchase price is paid off.

For example, a 5% cap rate means that every year, the rental income (less operating expenses) pays off 5% of the purchase price.  That means that in 20 years, the cashflows from the property have paid for it completely.

Let’s attach some dollars to the example.

Consider a property located in a smaller city outside the GTA that’s for sale for $600,000.  The property is triplex with three one bedroom units in it, which bring in $3,250 per month in rental income.  We have property tax, some basic building insurance, a property manager to handle the calls about problems (at 5% of gross rent) and then some funds for keeping the place up.  That totals $9K a year, which leaves us with net rental income of $30K.

On a purchase price of $600K, that $30K net rental income gives us a cap rate of 5%.

Note that the cap rate is calculated without taking into account the cost of borrowing.  This is done because every investor will have different options for borrowing.  Some may have the money to buy it outright, some may have a connection that will invest for 2% interest a year, others may need to borrow from banks or other lenders at hefty interest rates.

The cap rate allows income properties to be compared on an apples to apples basis.

Investors can look at a $300K single family home in Port Severn or a $1.6M multiplex in Toronto and be able to see what the cap rate will be for each property.

Now that we’re clear on how cap rates work, let’s get into the three rules to follow to make sure you choose a great income property.

Rule #1 – Multi-units Almost Always Beat Single-Family

Properties with multiple rental units in them (whether a bungalow with a basement apartment or a multi-plex with 4 purpose built apartments) almost always beat single tenant properties.  While it can be very easy to rent out a lovely home to a lovely family, the rental rates are not typically high enough to provide the same return as multiple unit properties.

In addition to the higher rental income, multi-unit properties also avoid the all or nothing problem that single family homes have for investors.  When you have a property with three or four units in it, it is quite rare for you to have more than one or two vacancies at a time.  Given you have to pay property taxes, utilities and likely a mortgage payment each month, having some level of income coming in to offset those costs is a very good thing.

While you could own multiple single-family homes to spread the risk of vacancies over your income property pool, you also then have multiple properties where costs can be incurred for issues.  Rather than one roof, one HVAC unit, one front porch, you have one for each of your properties and that means increased risk of higher maintenance costs.

Rule # 2 – The Greater Toronto Area means Greater Cap Rates

While properties in Toronto are certainly in demand with renters, the cost of buying the property means that your cap rate will likely be lower.  An income property in Ajax can literally be half the cost of a nearly identical property in Toronto.  While rents may be lower in Ajax, they aren’t half the rent of Toronto.  As long as you are careful to buy in a good location where you don’t have lots of vacancy, the lower rent can be easily made up for by the lower purchase price, which means a much better cap rate.

While you may not live close to an area that has the combination of lower prices and reasonably high rental rates, the math can be favourable enough to allow you to hire a property manager to properly oversee a place you purchase there.  Yes, you’ve got higher operating costs with a property manager, but the lower purchase price can make up for that.  If you ask us, removing the work of managing a property yourself at no effective cost makes a ton of sense.

Looking even further afield can result in even lower purchase prices, but be cautious you’re not buying in an area where rental rates are too low – or vacancies too high – to make up for the lower cost to buy.  After all, owning an income property with little to no income is not the goal!

Rule # 3 – Focus on the Negatives to get the Positive Returns

Some of the best income properties are properties that we would never advise a client to buy as their own family home.  Stigmatized properties – such as those backing onto power lines, fronting onto a busy street, or located beside commercial elements – can make fantastic income properties.

Buyers looking for their own home are often not too interested in such properties, which keeps the purchase price lower.  Tenants typically take shorter-term views than buyers and are often more interested in the utility of a rental (transit proximity, amount of space inside) than the long-term prospects for the property.

Make sure you don’t ignore issues with a property or neighbourhood that a tenant will care about just as much as an owner.  Homes in areas with bad schools are avoided by parents regardless of whether they own or rent, and health or safety issues with a property are legally required to be addressed by a landlord.  We work to find our clients the right mix of an appealing rental property with some aspects that make home owners shy away.

We really do love working with clients to find them income properties and we’d love to work with you to find a great investment property.  If that sounds appealing, then get in touch with us to discuss next steps!

The Toronto Regional Real Estate Board (TRREB) commissioned a report in November 2024 called “Breaking the Backlog – Restoring Fairness and Justice to Ontario’s Landlord and Tenant Board” and boy, is it a doozy.

We’re glad that TRREB is taking an active interest in this as the LTB is essential for maintaining balance and fairness in Ontario’s rental housing market, ensuring that both landlords and tenants can enforce their rights and obligations under the law.  You have likely seen headlines and articles about horror stories on both the landlord and tenant side of the equation and we’ve worked with clients on both sides who have been treated unfairly.  It all comes down to a system that isn’t working as intended, allowing bad faith players on both side to take advantage.

Let’s get into the situation and how to fix it.

First off, what exactly is this LTB you keep talking about?

The Landlord and Tenant Board (LTB) is a tribunal in Ontario, that resolves disputes between residential landlords and tenants. It operates under the Residential Tenancies Act, 2006 (RTA) and plays a critical role in administering rental housing laws in the province. The LTB’s primary functions include:

• Dispute Resolution: Handling applications from landlords and tenants regarding issues such as rent arrears, eviction, property maintenance, and lease disagreements.
• Mediation and Hearings: Offering mediation services to help parties resolve disputes and conducting formal hearings when necessary.
• Orders and Decisions: Issuing binding rulings and orders based on the evidence and arguments presented during hearings.

The LTB is part of the Social Justice Tribunals Ontario (SJTO), which oversees several tribunals focused on social justice matters. It employs adjudicators, who are independent decision-makers, and support staff to process and resolve cases.

What’s the problem?

The LTB has faced significant challenges in recent years, including extensive backlogs due to lengthy delays.  If you’re wondering how bad it actually could be, get ready.

As of February, 2024, the LTB had more than 53,000 unresolved cases.  While the specific of the cases vary, remember that the whole focus of the LTB is issues like rent arrears, eviction, property maintenance and lease disagreements.

Think about that – over 53,000 cases where there is a tenant who stopped paying rent, or a landlord who evicted a tenant illegally, or mould in the bathroom or broken locks, or even simply some other type of disagreement between landlord and tenant.

If you ever read a case of a bad tenant or landlord and wondered how that could happen and then said there must be laws against that sort of thing, you’d be right. There are laws and rules and right now there are over 53,000 people waiting for their case to be heard.

Speaking of waiting, with 53,000 unresolved cases, it is taking a while to get a hearing.  There is a pecking order of sorts when it comes to which cases get resolved the quickest, but “quick” is a relative term.

For example, the LTB says that urgent matters such as illegal lockouts and other high-priority requests get the fastest level of service, with about 5-6 weeks on average to have it scheduled.  Even better news is that most decisions (which are called Order) are issued with 30 days or less.  So, if you’re a tenant who has been illegally locked out of your rental unit, just sit tight for two to three months and you should be sorted.

Up until quite recently, the wait time for non-payment of rent issues was five months, plus of course the month or so before the Order would be issued.  The website for the LTB now says that takes approximately three months, and if that’s true, it still means four months of a landlord not being paid rent before they receive an Order.  Keep in mind that many landlords don’t go to the LTB to evict for non-payment of rent until the issue has become quite extreme.  It is not uncommon for landlords to be owed at least two months rent before they start the process, so in many cases, it actually means that a landlord is owed 8 months of rent by the time the tenant is evicted.

Less urgent matters than illegal lockouts or non-payment of rent are now being scheduled with 5-7 months, plus of course the month to receive the Order from the LTB.  No hot water in your unit?  File an application to the LTB and two seasons later, it may be addressed.  Lots of extra people living in the rental unit you own?  File an application to the LTB, and within six months, you should get an answer.  I’m sure the extra people won’t cause much wear and tear or complaints from the neighbours.

While it is landlord and tenant relationships at odds in these cases going before the LTB, 84% of applications to the LTB are from landlords, so the backlog and delays are dramatically impacting existing landlords as well as strongly discouraging investors from purchasing rental units in Ontario.

What’s causing this mess?

The TRREB “Breaking the Backlog” report identifies several key factors causing the backlog and delays at the LTB, so let’s review.

Understaffing:  The LTB has just 70 full-time adjudicators, far below what is needed to handle the volume of cases effectively.  Many of those adjudicators are new in their roles since 2023, so these aren’t seasoned experts who quickly and efficiently deal with complex cases.  Put bluntly, inadequate staffing levels directly limit the number of cases that can be processed daily, causing, you guessed it, a backlog.

Increased Case Volume:  A 23% increase in case filings over the past five years has overwhelmed the LTB’s capacity to keep up.  Things weren’t great a number of years ago, but the combination of more cases and staffing that isn’t keeping pace has meant it got much worse, quickly.

Outdated Technology and Systems:  The reliance on outdated, inefficient administrative processes and technologies creates bottlenecks in case management and resolution.  For example, applications can be done via an online portal but also can be submitted via email, or mail or in person.  Applications done via the online portal were entered into the system immediately, but emails, mailed in or in person submissions could take three months until they even enter the system!  While online hearings may seem like a great way to address delays and increase efficiencies, it has amplified accessibility issues amongst vulnerable groups.  Anyone living in poverty and lacking sufficient Wi-Fi or a private place have great challenges with online hearings.

To sum up, the current process for scheduling hearings, issuing decisions, and communicating with landlords and tenants is slow and lacks the flexibility to adapt to demand surges.  These issues collectively exacerbate delays, creating extended wait times for hearings and decisions.  The end result?  The mess we’re in right now.

How on earth do we fix the LTB?

While the problems are significant, there are steps that can and should be done to fix the LTB.  Some have already started but with the significant backlog and delays, we need it to be better, sooner.

The full report from TRREB goes into detail on recommendations, but here are the key steps.

Increase Staffing Levels: The LTB needs more adjudicators and support staff to process applications efficiently. Current understaffing significantly contributes to the backlog and delays in resolving disputes.

Modernize Systems and Processes: Upgrading outdated systems, implementing online services, and streamlining administrative procedures can reduce inefficiencies and enhance user experience.

Set Clear Timelines: Introducing mandatory timelines for hearing cases and issuing decisions would help reduce the unpredictability of wait times for landlords and tenants.

Provide Adequate Funding: Increased funding is necessary to support staffing, technological improvements, and other enhancements to ensure the LTB can meet demand.

Improve Accountability and Transparency: Ensuring that the LTB operates with greater oversight and regular public reporting on performance metrics can build trust and ensure ongoing improvements.

Doing the above things would be a great way to address the significant backlog of cases at the LTB while improving fairness and efficiency in Ontario’s rental housing sector​.

While an article about the Landlord and Tenant Board may seem like a strange focus for a team of real estate agents, we care deeply about housing in Ontario.  Within our team we represent both landlords and tenants and we’ve seen first-hand the challenges that the LTB is causing to both sides.  We believe the majority of landlords and tenants are looking for a fair agreement on rental housing and it’s time that the LTB became the solution to problems in the rental market.

If you’re a landlord looking to rent out a property, or a tenant trying to find a home of your own, don’t hesitate to get in touch with us.

When short-term rental platforms like Airbnb and VRBO first arrived in Ontario in 2009, they offered a new option to home owners or investors who were interested in making money off properties.  By competing against hotels and offering short-term rentals, property owners could realize significantly higher rental income than they could by renting out the home or unit to a long-term tenant.

During the initial heyday of these platforms, most municipalities didn’t have restrictions on short-term rentals.  It took a while for the platforms to grow in popularity and for municipalities to begin to see some problems as a result of the change.

In Toronto, it wasn’t until early 2018 that City Council approved the regulation of short-term rentals in Toronto.  Up until that point, short-term rentals existed in a bit of a gray zone and we saw pure income properties being rented short-term as well as some principal residences.

The initial regulations in Toronto were appealed to the Local Planning Appeal Tribunal (LPAT) and as such did not go into force.  The hearing for the appeal took place in August, 2019, and the City eventually received a positive decision at the LPAT, so it wasn’t until November, 2019 that the short-term rental regulations came into effect.

Over time, the rules, fees and taxes that apply to short-term rentals have increased, and we’ve also recently seen the CRA crack down on the sale of such properties, with significant tax impacts.  It’s time for a review of what it costs to register and operate an Airbnb, and what happens when you sell such a property, to see if it is still a good option.  Here we go!

The Good Old Days

When Airbnb and other short-term rental platforms arrived in Ontario back in 2009, there were no licensing, fees or specific regulations in place for this type of rental.  Cities had largely left the regulation of rentals to the province, with bodies such as the Landlord and Tenant Board and legislation such as the Residential Tenancies Act.  Short-term stays were done by hotels and those businesses were established and run by corporations, rather than individuals who had a home they didn’t stay in all year round.

The Times, They Are A Changing

By late 2019, rules for short-term rentals were in place in Toronto, but even now (late 2024) a number of municipalities in the GTA don’t have things set in stone.  Whitby, Pickering, Aurora and Newmarket are still working on the regulations, and as such it hosts are really only concerned about following local zoning, property standards, and tax requirements.

The initial rules in Toronto had a Municipal Accommodation Tax (MAT) that was set at 4%. This tax applies to short-term rentals and supports city tourism and infrastructure. Registration fees for owners were a very reasonable $55.

In 2023, Toronto raised the MAT to 6%, ensuring short-term rental operators remit this amount quarterly. To simplify compliance, Airbnb and similar platforms began to offer a remittance option on behalf of hosts.

Beginning in 2025, registration fees are set to increase drastically from around $55 to $375, highlighting a stricter stance against non-compliant operators.

No Investors Allowed

As municipalities created the regulations for short-term rentals, most decided that such rentals would only be permitted in a homeowner’s primary residence.  If you were an investor and didn’t live in a home, you could rent it out long-term (more than 28 consecutive days) but short-term rentals were no longer permitted.

This was done due to concerns about housing shortages, as the proliferation of short-term rentals in residential units had begun impacting the long-term rental market.

As of November, 2024, this is the case in Toronto, Mississauga, Oshawa, Oakville and Burlington.  Basically, if the municipality has developed regulations, the rule is short-term rentals are only allowed if it is your primary residence.

Wait, what’s that about HST?

In addition to the registration fee and the Municipal Accommodation tax, owners of short-term rentals also need to be aware of HST obligations.

Airbnb rental income becomes subject to the HST if the rentals are for less than 30 consecutive days (one month) and the rent charged is more than $20 a day.  Given the cost of stays in Ontario, almost all Airbnb properties charge more than $20 a day, so if you a host is doing significant levels of bookings, HST is charged on the stay, and due to the government.  This is in contrast to long-term residential rentals, which are exempt from HST.

While charging and remitting HST can be either neutral or slightly beneficial (as you can claim input tax credits on costs incurred in renting the unit), a much bigger problem exists when the owner of an Airbnb property decides to sell.

In October, 2024, the Tax Court of Canada ruled on a case and held that the sale of a used residential property rented out on Airbnb is subject to HST on the entire sale price.  A reminder that resale residential properties (i.e. not a new build where you’re the first buyer) in Ontario don’t have any HST charged on the sale.  This is the case even if the property was an income property and rented out on long-term basis – but not if it is being used for short-term rentals.

In the ruling that came down, the judge ruled that at the time the owners sold the property, it was not a tax-exempt residential complex, since for tax purposes it was similar to a hotel, motel, inn, boarding house or lodging house. All of the condominium leases for the 14 months before the sale were for periods of continuous possession of less than 60 days, i.e, short-term rentals.

As a result of the “commercial rental operation” during that time, the entire sale price of the condominium was not exempt from HST.  This means that if you own and operate a property as a short-term rental, you can expect that the CRA will treat the sale of that property as one that should charge and remit HST.  The exact amount of HST owing would require a tax specialist to determine, but it is obviously significant dollars given the 13% HST rate.

If the seller doesn’t realize that HST should be charged, and doesn’t include wording in their Agreement of Purchase and Sale related to the sale price being plus HST (rather than inclusive of HST), they will be out of pocket for the HST that should have been charged.  Even if the seller knows this may happen, they face a situation where their property becomes extremely unappealing to buyers who will have to pay HST on the purchase, compared to another property they could buy that wasn’t used for short-term rentals and therefore doesn’t have HST charged on the sale.

In short, the disposition of properties that were used for short-term rentals may result in a significant loss of equity in the home due simply to the HST component that has to be made up for – either by the seller directly to the government, or by the buyer who would demand a reduction in the purchase price.

When an Airbnb host has to pay a registration fee, charge a municipal accommodation tax and charge HST, it is no wonder that the days when Airbnb was a cheaper option than hotels are gone.  As prices rise for guests, it seems logical that occupancy levels would be lower and that owners will make less revenue on the unit.

Add in the significant tax hit at the sale of the property and there is a very real question as to whether Airbnbs or other short-term rental options are still financially viable.  Long-term rentals may bring in less revenue on the surface, but with significantly lower costs to manage and operate and no HST issues upon selling, the equation has shifted considerably.

If you are considering how to best benefit from a property that you own that you don’t live in full-time, then we’d love to walk you though the options.  Get in touch with us and we’ll start the ball rolling!

If you’ve ever had a conversation with friends about their experiences with real estate agents, you’ve likely heard some horror stories about uninformed, unmotivated, and unprofessional agents.  When you delve into the specifics, the key failing is often a lack of specific knowledge that would have helped make the process go better for the client.

When it comes to real estate investment, the situation is similar, and is arguably even more pronounced.  Take a look at some of the key results of a survey of real estate investors by the Real Estate Council of Ontario.

• 21 per cent of investors wished they had looked at more properties.
• 26 per cent of investors wished they had a better grasp of the buying process.
• 32 per cent of first-time investors said they were not prepared or knowledgeable about the home buying process.
• 43 per cent of investors said there were sections of the real estate contract that they did not fully understand.

As we read the list above, one thing became abundantly clear – most investors are poorly served by their real estate agents.  Let’s reframe the points above from the perspective of how agents failed their clients.

• About 1 in 5 agents pressured their investor clients to buy a property early in the process rather than showing them more investment options.
• More than a quarter of agents couldn’t adequately explain the process of buying an income property.
• Almost 1 in 3 agents working with first-time investors didn’t prepare or educate those clients.
• Almost half of the agents involved in helping investors buy income properties had clients who didn’t fully understand the contract they signed.

The simple fact of the matter is that while all licensed real estate agents can help investors buy an income property, a lot of them shouldn’t be doing it.

The process, the terms, the calculations to determine which option is the best investment – these are all aspects of buying an investment property that can be confusing and intimidating.  Add in changes to government rules and regulations, financing qualifications and shifting markets and you have a challenging situation to handle properly.

The good news is that picking a real estate agent for your income property purchase isn’t rocket science.  It’s all about making sure that the person you’re trusting to help you navigate you through the process actually understands the process.  Without further adieu, here’s our three rules for picking an agent to buying an income property.

Rule #1 – The agent has to be an investor as well.

If the agent is not a real estate investor as well, don’t hire them to be your agent.  They don’t need to own a slew of properties, but if they haven’t bought and sold investment properties of their own, and if they haven’t owned and managed an investment property, don’t hire them.  An agent who is also an investor is able to bring that knowledge and perspective to the search for your investment property.  They’ve spent the time in the past to figure out how to do it properly, because they’ve actually put their own money on the line.

Within the Refined team, we have years and years of experience owning investment properties.  We’ve bought and sold our own investment properties, renovated to increase rents, found and on a few occasions evicted tenants and overseen property managers, contractors, and tradespeople.  Does that help when we work with investors?  Absolutely.

Rule # 2 – The agent has to be able to do the math.

If the agent can’t calculate cap rates, fill in all the pieces of the ROI formula and generally provide you with the information you need to compare properties and decide, then they aren’t doing their full job.  If you are the one struggling to gather this information and assess what it means, you will miss out on fast moving opportunities and won’t have the time to see as many options.  You don’t need your agent to be a tax accountant but they have to be very comfortable with the math.  It’s an investment of your funds and needs to be treated as such.

Within the Refined team, we have agents who have taken courses in statistics, financial statement analysis, macro economics, accounting, Canadian taxation, international taxation and intergalactic taxation.  Well, the last one we made up, but the rest is true.  We’re very comfortable with numbers and analyzing them and we have used that knowledge to create spreadsheets to analyze real estate investments quickly and thoroughly. 

Rule #3 – The agent has to see the big picture.

In any real estate purchase, an understanding of the overall market as well as specific neighbourhoods or streets is crucial.  For investment properties, the agent needs to be able to also consider macro economics of the region.  The strength or weakness of the area’s economy impacts rental rates and vacancy rates, which in turn impacts housing appreciation or depreciation.   When the provincial or federal government announces funding for a major project that creates thousands of jobs, those new jobholders need places to live and rental properties in that area are in demand.  When a major employer in a town closes down or lays off hundreds of people, those jobseekers move elsewhere and rental properties that used to rely on them are now vacant.  The agent you hire needs to be able to place the different real estate investment options in a bigger context than just the land and building.

Within the Refined team, we have access to detailed demographics and economic data for the various neighbourhoods, communities, and regions within the GTA.  When we combine that information with specific market conditions, rental rates, vacancy rates and purchase prices, we give our investor clients confidence in their decision to buy or pass on a given investment. 

As the survey we discussed shows, there are a lot of investors out there who, in a weak moment, choose a weak agent.  By following the above rules, you can make sure that doesn’t happen to you.  If you like the sound of that, then get in touch with us.  We’d love to make sure your next income property is a star in your portfolio!

We work with investor clients all the time and the journey to finding and buying a great income property often starts with the same question these days.

“Are there really still good income properties out there?”

The answer to that is yes, but not that many and it very much depends on the parameters of your search.

Let’s review what qualifies a real estate investment property as a “good one”, what’s changed over the years and how we help our investor clients find their next purchase.

Gimme the good stuff.

A “good” income property can be defined in many different ways, depending on what’s important to the investor.

• Some investors want a passive investment that requires very little management, so a “good” income property for them is one that they can largely ignore for years and let the market appreciate over time.
• Some investors are after the best possible exit result and look for real estate that appreciates the highest during their planned length of ownership, regardless of what the cashflows look like during ownership.
• Some investors can’t stand the idea of having to put money into an income property on a monthly basis and consider anything that generates positive cash-flow to be a good income property.

While different investors place different emphasis on the above options, the holy grail is of course a combination of all three.  When we talk with an investor client about a “good” income property we’re talking about a place where:

• There are quality tenants who pay the rent, don’t trash the place and who stay for quite a while.
• The property itself shows great appreciation over time so that you’re building significant equity in the property based on market changes during ownership.
• The purchase cost relative to the down-payment, the cost of financing and the rental rates all combine to give you a positive cash-flow each month.

Before we get into where such properties are located, let’s review a couple of key points.

Put enough money down and anything is cash-flow positive.

Years ago, one of our agents was showing a condo unit and as he was waiting for his client, a fellow in the lobby asked him if he was a real estate agent.  The man proceeded to tell our agent how he owned a dozen investment units in the city, including four in the building and how all of them were cash-flow positive.  Our agent congratulated the investor and asked how he managed to do that despite real estate price growth exceeding rental rate growth and the man proudly told him he put down at least 50% on each property.

We still reference that story as it illustrates a very important point when it comes to investment properties.  It is easy to have a cash-flow positive property if you put down enough money.  If you paid cash for a condo unit and received one dollar above your maintenance fees and property tax obligations, you technically own a cash-flow positive property.

We’ve previously written about capitalization rates and how calculating cap rates for various investment property options is a great way to compare apples to apples by stripping out the down-payment or financing costs.

When we identify a “good” income property, it isn’t one we’ve made look good by requiring our clients to put down lots more money than other properties.  We most often start by asking our clients how much of a down-payment they have available and then look to see where that down-payment is best invested.

That has become more challenging in recent years due to one simple reason.

Rents are up but so are all your costs.

We’ve seen a marked increase in the rental rates that can be charged in most markets in the GTA in the past number of years, but at the same time, we’ve also seen costs increase in many different areas.

The most impactful increase in costs for some investors has been the cost of financing.  Variable mortgage rates are based on the bank prime rate, which in turn is based on the Bank of Canada overnight rate.  Back in March, 2020, the rate was lowered to 0.25% as a result of COVID and concerns about the economy.  We had two years at that rate and then in March, 2022, it started going up, and up, and up.  From March 2, 2022 to July 13, 2023, it went from 0.25% to 5% and that made any variable rate mortgages go up with it.

For investors who had bought properties with as little down as possible and who choose a variable rate mortgage, this created the perfect storm.  A high mortgage amount, with a rapidly increasing cost of financing.  While rental rates did go up during the same time, it was at nowhere near the same level of as the cost of financing so many “good” investments became bad investments.

In addition to the cost of financing, the level of inflation has risen sharply in the past couple of years as well, meaning that everything related to the property has also increased.  Whether it is a freehold or a condo property, the costs of owning and maintaining real estate has increased over the past few years.

With costs higher on a number of fronts, the key factors for what makes a “good” income property remain how much the property costs to buy (as that directly impacts how much it costs to finance it) and the rental rates that can be charged for the property.

Let’s discuss rental rates, shall we?

Oh wait, rental rates are mostly unknown.

One of the biggest challenges with general extrapolations of where the “good” income properties exist has to do with a major variable in the equation, namely rental rates.

This is because data around rental rates are disbursed among a number of different players and gathering any sort of accurate and timely data is quite difficult.

The Toronto Regional Real Estate Board regularly releases rental rate data, but it is focused on condo apartment rentals and doesn’t look much at freehold property rentals.  This is due to the majority of rentals on the MLS system being condo apartments of defined types – 1 bed, 1 washroom, 2 bed, 2 washroom, etc.

When you start to get into freehold rentals, there are so many variables that impact rental rates, any averages are inaccurate or flat wrong.  Ask us for how much a house rents on average and we’ll ask you how many bedrooms it has, whether it has a backyard, if there is a garage, if the basement is included and so forth.

In addition to the fact that the data held by organized real estate is quite variable, it is also only a portion of the rental data out there.  Unlike homes for sale, which almost exclusively sell via the MLS system, many rentals are done privately or via platforms that don’t receive or track rental rates.  For every property rented via MLS, who knows how many are rented by platforms like Kijiji or via signs on lawns or in apartment lobbies?

When we work with investor clients, we can determine likely rental rates for a specific property by looking at all the data sources we have available, but we can’t do an aggregate analysis to push our clients to one neighbourhood or area in particular.  The data just isn’t available, so we have to focus our search for “good” income properties on a key factor we can determine.

The cheaper the purchase price, the higher the chance it qualifies as a “good” investment.

While there are some exceptions to this statement, by and large, if you buy real estate as a lower price than other comparable properties in different areas, you stand a greater chance of it being a “good” income property.

While rental rates do vary depending on area, our experience has been that the variability of purchase price is much more than the rental rate spread.  While a home in Toronto may be able to charge more rent than a home in Ajax, the difference in rental rates is nowhere near the difference in purchase price.

Our starting point for conversations with investor clients is therefore a series of simple questions that lead to us identifying some good options that fit their criteria.

• What makes a “good” investment property in your mind?
• How much of a downpayment do you have?
• Are you willing to go to where the best return is? If not, where are you willing to invest?
• Will you invest in any type of residential real estate? If not, what types will you consider?

The above questions give us the ability to start focusing the search.

Consider an investor who has $150K for a downpayment, hates paying CMHC mortgage insurance fees, who wants to stay within a reasonable distance of their primary home in Markham, and who thinks condo apartments are terrible investments.  Such an investor has a budget of $750,000, is limited to York and Durham region and wants a freehold property.  Understanding these requirements means that we look to find a “good” income property within them – or, if that isn’t possible, showing the investor why their requirements don’t allow a purchase to take place and figuring out what we can adjust.

Once we have the parameters set, our focus becomes finding properties that fit those criteria, determining rental rates for those properties and analyzing the results.  In some cases, investor clients shift their preferences as they understand the potential returns and in others they choose to move forward with a property that makes them feel comfortable, with a rate of return they find acceptable.

Despite the run-up in real estate prices in the past couple of decades and the increased cost of financing in the last few years, we regularly work with investors who are buying income properties that suit their requirements.  We can find you “good” income properties that suit your comfort level, or we can help figure out what you’re willing to accept if the numbers work.

By helping clients understand the options based on their preferences, we are able to search for the needle in their particular haystack!  If that sounds like an approach you’d be comfortable with, then don’t hesitate to get in touch with us.