Tag Archives: condo bylaws
They can be, but you must know the lay of the land
Excerpt from an article by Ellen Roseman – Toronto Star
There are warning signs for the Toronto real estate market, which had its best year ever in sales of existing homes last year.
Meanwhile, there’s a surge of new condos in Toronto. About 38,000 rental apartments are coming on stream and will be registered this year and in 2007.
Still, Toronto is not seeing the same speculative activity as it did a decade ago. Investor-held rental condos are now 18 to 19% of the total market, compared to more than 30% in the mid-1990s.
The vacancy rate for rental condo apartments was just 0.9% last year – compared to an overall 3.7% vacancy rate for all rental units in Toronto.
Given what could be a difficult time for condo investors, what should you be looking to buy?
Investors should buy the smallest units in the building, anywhere from 350 to 600 square feet. Tenants aren’t rich and powerful. They can afford to rent the lowest common denominator.
You have to hook up with the right real estate agent. If you’re a loyal client, they’ll get you into properties before the public do. It’s much like getting into a hot night club.Put enough into the down payment to cover mortgage principal, interest, taxes and condo fees, including potential increases in condo fees.
Invest in mid-priced condos. Don’t buy more expensive units, which won’t cover their costs in rent.
Anything under 700 square feet performs best. Remember you’ll always be competing against the lowest-priced condos, with units for sale or lease.
Do your research on rents in the neighbourhood, vacancy rates and the time it takes to find a tenant for similar units. There’s nothing worse than buying a place that will sit vacant for months.
Be prepared to do your own property management or consider the costs incurred to hire someone. It may be worthwhile to hire a real estate agent to rent out your condo unit since realtors not only bring expertise in preparing the lease documents to best protect the owner, but also bring a higher quality of tenants.
“Look for condos that appeal to the widest group of people possible,” he says. This means easy access to public transit, shopping, parks and other amenities.
And if you’re looking at an existing building, check the percentage of units that are owner-occupied. More owner-occupied units means more care, maintenance, decorum and pride of ownership, Bentley says.He advises buying in buildings that have a higher percentage of larger units, such as two bedrooms or one bedroom with den.
Does the condo have a parking spot with a separate deed? This means you can sell it if you don’t need it. “Liquidity is an important factor,” Bentley says. “Being able to divide and sell separately does have some merit.”
Some rules are quirky. Tenants may not be allowed to park their bicycles on the balcony or set up a home-based business. Read the bylaws so you know what you’re responsible for and what you can and can’t do as an owner.
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