If you’re thinking of buying a condo to rent out in Toronto, you’re not alone. There’s no shortage of investors who are attracted to the steady income and potential for price appreciation that units in the GTA frequently provide. While it’s true that becoming a landlord can lead to some major perks, there are also a few things you should know before taking the plunge. By ensuring you understand your new role, you’ll be setting yourself up for a smoother (and more potentially profitable) condo investment.
If you’re thinking of stepping into the role of a landlord, here are five things you should know…
1) Location is crucial
One of the most important early steps involved in purchasing an investment condo is deciding on a location. There are a few factors to consider when you’re choosing a neighbourhood, but buyer demand should always be your guiding principle. Whether it’s an up-and-coming area or a well-established community near the city’s core, your agent can help you decide on a locale that will help you maximize your potential returns.
2) Doing the math is key
Once you’ve chosen a neighbourhood and begun looking around, it’s time to determine if any of the options you’re seeing are likely to be a sound investment. For each prospective unit, you’ll want to determine your possible rental income by looking at rents for similar condos in nearby buildings. Next up, it’s time to tally up your monthly operating expenses—including your mortgage payments, insurance, and projected maintenance costs. These numbers will act as a solid starting point when you’re assessing an investment.
3) Your tenants matter
It goes without saying that you want to find a tenant who’s both reliable and financially stable. The biggest thing you can do to help ensure that the renter you choose fits this description is setting up a careful screening process. Ask for employment and landlord references, run a credit check, and verify all of the information you receive. Fortunately, an agent with real estate investment expertise can advise you, which will help ensure that you find a fully qualified tenant.
4) Know the Residential Tenancies Act
Before you become a landlord, you should know your rights and obligations—along with those of your future tenant—inside and out. The only way to do that is by reviewing the provincial Residential Tenancies Act. From deposits to rent increases to the notice you’ll have to provide before entering your unit, this crucial document will guide all of your conduct as a landlord.
5) There’s help available if you need it
Whether you’re maintaining a property remotely or simply have a busy lifestyle, you may find that the responsibilities of being a landlord are a bit overwhelming. One way to remove much of the stress from the job is by hiring a property manager to help with day-to-day operations. Your financial situation, the number of units you’re renting out, and the amount of free time you have may all factor into your decision to hire a professional (or not).
No doubt about it: being a landlord requires work, effort, and some know-how. The good news is, understanding the rental landscape will allow you to pave the way toward a profitable investment. Your real estate agent can be an invaluable resource at every step.
Thinking of buying an investment condo in the GTA? I can answer all of your questions. Call or text me at 416-500-5360, or send me an email at rashid.notash@rogers.com and ask away!
