The demand for income generating properties across the GTA shows no signs of letting up. Overall home sales were down over 10% last month, but according to TREB prices shot up 6%. Lack of inventory, a continued low borrowing climate and the traditional spring buyers’ surge has led to an almost untenable situation where multiple offers continue to be the norm. The average price of a detached home in the downtown core is now over $900K! There is a huge imbalance at the moment for properties priced in between $500K and $700K in areas like Leslieville and Roncesvalles and income properties in these areas continue to be few and far between.
Some investors think that the best strategy is to wait as prices are going to come down. Some people also think the Leafs are going to make the playoffs this year. I’ll be siding with the hockey fans before I would the investors, which I think says quite a lot.
I hope you all enjoy the next few weeks of warm weather as we say goodbye to the winter cold.
Today is April Fools’ Day, so here are some sales from March I wanted to share with you. Believe it or not, these sales are real and not a joke:
- A fourplex on Lippincott near the U of T was listed last month for $899K. It traded for $219K over that. Another one in Dufferin Grove went $120K over.
- A tiny bungalow in Leslieville with a basement apartment listed at $449K. It sold for $571K.
- A fixer-upper on Regal Rd listed at $1.1M. It traded for $262,500 more than that.
- Almost 75% of all the two-storey sales in W07 (the Stonegate/Queensway area in Etobicoke), were over the asking price. Bungalows that likely will be torn down to make custom homes are trading in the $700K range.
- A semi-detached house on Prust in Leslieville had 20 offers on it. It sold for $152K over the asking price.
- There were four properties in March in High Park that traded in excess of $100K over the asking price.
- I heard that a house on Campbell Ave. in the junction apparently had 42 offers on it. Imagine trying to buy a property where there are forty other people who also want it.
In many cases the listing agent priced the property below market value to attract a lot of offers, but it is still mind-boggling to me when over a dozen offers turn up. This speaks to the current shortage of properties downtown and the continued high demand.
Should you hire a third party to look after your rental property? Usually, this is a fairly easy decision based on economics. If you are paying $100 or $200 a month and it does not hugely impact your bottom line return, then it may be OK to consider it. Rates for these kinds of services do vary. If you are paying a percentage of your monthly income, again it depends on how much of your bottom line you are sacrificing. If you only have two rental suites, then it likely will be difficult to justify. If you own several income properties, or you live a little further away, then it may make more fiscal sense. Remember that if you keep your buildings in a good state of repair, and find good, responsible tenants, then there should be very little that you need to do. Over time there will be maintenance issues, but again these should be reasonably simple to handle.
If you do decide to hire a property manager, they should save you time, effort and money. An effective property manager should be able to maximize the rents you can get and have your suite vacant for as short a time as possible.
Remember too that property management services are tax deductible, as this is a direct expense item in the running of your property. Other services that you can expect from a professional manager or management company:
• Prepare property for rental (paint, cleaning, etc.)
• Determine optimal rental amount
• Design a targeted marketing plan to attract tenants
• Conduct Tenant screening including credit checks, checking references, etc.
• Assist with Tenant move in
• Collect and submit rental cheques
• Prepare Detailed monthly accounting statements for tax purposes
• Conduct Regular property inspections
• Handle all maintenance issues
• Offer 24/7 Emergency Maintenance service