Happy New Year everyone! I’d like to personally wish you and your family all the best. May all your hopes and dreams come true in 2012 and may you have a truly fun and memorable year. I look forward to seeing many of you in the upcoming months. I will continue to be your eyes and ears for the residential income property market in the Toronto downtown core. As always, if any of you have any landlord or income property market questions, please feel free to shoot me an e-mail at any time.
As is customary at this time of year, I’d like to look ahead to try get and get a fix on what we might expect over the next few months. Many of you know that the real estate market in Central Toronto has been a very robust sellers’ market, characterized by multiple offers and prices reaching all-time high levels in top areas. In fact, recently the Economist Magazine branded Canada one of the nine countries where “home prices are overvalued by about 25 per cent or more,” and among the four where prices are in line with those in the United States “at the peak of its bubble.” This has many people concerned that real estate in Toronto is over-valued and that they should avoid the market.
Should this give those of you thinking about a real estate purchase in 2012 a real cause for concern? I don’t really think so. I don’t believe that we are in a traditional bubble and heading for a sudden crash. While prices are still high, I still anticipate strong demand since interest rates are still quite low and we don’t have the same kind of subprime mortgage crisis as they do in the U.S. Some thought that prices were starting to soften a little at the end of last year anyway, so perhaps there may be a little leveling off. I predict that the income property market in Toronto will look very similar to the past six months – the best properties will continue to be popular since they still make a lot of sense to own long term. I still believe that if you can obtain real estate with 20% down and have your tenants completely cover all of your costs, then it makes sense to pursue if you can handle the responsibilities of being a landlord.
The duplex and triplex market will still see cap rates dip under 5% in the prime neighbourhoods, since the rental market continues to be very strong. Being a landlord is still a very good way of acquiring passive income. Prices will continue to be expensive in the downtown areas close to the subway stops. Overall prices dropping by 10 to 20 % seems like a real stretch to me, especially on income properties, so I just don’t see it happening. On the other hand, I don’t expect prices to go up too much more either. Let’s see what the next six months bring. Keep an eye on the resale condo market. So long as that market is still moving along at top speed, then I think the income property market is safe. Keep checking back in with me and I will continue to update you with Toronto income property sales activity.
I have found in my travels that there a good landlords and then there a great landlords. Great landlords go that extra step to make sure that their tenants are comfortable and their live-in experience is as enjoyable as possible.
Once you have chosen a tenant and signed a lease, here are ten things that you should do as a landlord prior to renting out your suite:
1. Make sure that the suite is clean and free of all debris. If need be, give the suite a fresh coat of paint. Ensure that all light fixtures are operational. It doesn’t hurt to leave a few extra light bulbs in the suite.
2. Put together an inventory of all furniture and fittings, and make sure the tenant agrees and signs it before they move in.
3. Leave instructions/manuals for all appliances that will be left at the property, including cookers, washing machines, fridges and freezers. Not only is this helpful for the tenant, it’ll save you having to answer phone calls about how to turn the dishwasher on! ”
4. Make sure that everything meets fire code and that your extinguishers, carbon monoxide detectors and smoke alarms are all in good working order.
5. Compile a list of emergency contact numbers for your tenant, including your own. It is also wise to put together a trouble-shooting sheet so tenants know how to react in an emergency.
6. Before a tenancy, take meter readings and transfer all utilities to the new tenant.
7. Explain to your new tenant how to use any safety equipment, such as fire extinguishers and alarms, plus point out any fire doors or window locks and show the tenant how to work the burglar alarm, if you have one. Also, show the tenant how to use the laundry machines (if necessary).
8. For that added personal touch, put together a useful welcome pack for your tenant. This could include information such as how to use certain items and when the bins are collected etc. It usually gets the relationship between the landlord and tenant off to a great start and, unfortunately, not enough people do this.
9. Establish good lines of communication with your tenants. Ensure that the tenant knows what is expected of them during the tenancy and make sure you know what they expect from you too.
1. If possible, introduce your tenants to everyone else in your building and the neighbours. This will make everyone feel more comfortable and safer.