Here Are The Four Types of Residential Rental Property in Toronto
Condos, Townhomes, Single-Family Homes, & Multiplexes
Our team at LandLord specializes in helping investors rent out and maintain boutique investment property. These are the four main types of residential investment property in which our clients choose to invest. All have their benefits and challenges. But with the right timing and strategy, they can all make profitable investments.
Investment Property Type 1: Condo
Condos, as investment property, have a moderately low cost of entry and are often low maintenance. However, they can come with fairly high maintenance fees. Currently in Toronto, it is not uncommon to see maintenance fees over $700. You can expect maintenance fees to hover around $0.65 per square foot. That’s $650 on a 1,000’ sq condo apartment.
Renting Out Your Condo
Renting out your condo in Toronto in 2021 and for the next few years will prove to be challenging. Many hopeful landlords plan to bring in a profit after mortgage payments and maintenance fees by way of rental income. With maintenance fees as high as they are, and the rental market more competitive than ever, this might not be possible. But you can still earn a rental income to soften those mortgage payments and fees.
To stay competitive in Toronto’s condo rental market, consider the needs of condo renters. Traditionally, we could say that condos attract young urban professionals who live and work downtown and don’t spend much time at home. Location is critical. And the friendly security of having a concierge is a big bonus. Now, however; the young urban professional is working from home and uncertain if they will ever return to the office.
With all of that in mind, consider the following when in the market for a condo as a rental property. Location is key. When things return to somewhat normal, a central location will be an invaluable asset. And work-from-home space is highly desired. An extra bedroom, den, or even a nook can be an excellent space to set up a desk.
Are Condos a Good Investment?
Depending on the size, you may not immediately be cash positive, but condos have rapidly increased in value in the past. We can’t predict the future, but for the right price and with the right strategy, a condo can make an excellent real estate investment.
Investment Property Type 2: Townhouse
Townhomes have a mid-to-high cost of entry and generally low upkeep, with mid-range price volatility and mid-to-high level of appreciation prospects.
Renting Out Your Townhouse
Townhomes offer renters more space, often some outdoor space, and more privacy than the previously mentioned condos. You can expect to attract more established renters, couples and even young families. With these groups of renters, you can also expect a lower turnover rate. This means the rental will spend less time vacant, and more time earning you rental income.
The best thing to do to keep your investment townhouse competitive in the rental market is maintaining it, repairing it, and renovating it when possible. And because your tenancies may last longer, upgrading during a vacancy can be profitable in the long run.
Are Townhomes a Good Investment?
A townhome in Toronto is often a great investment. It’s nicely balanced between the accessibility of condos, and the risky rewards of single-family homes.
Investment Property Type 3: Single-Family Home
The average price of a single-family home in Toronto has exceeded 1 million dollars. It’s no secret that the cost to entry on this type of investment property is high. But, for those who can afford it, the appreciation prospects are also high.
Renting Out Your Single-Family Home
Single-family homes, as their name suggests, attract families. Roommates, couples, and students may also seek this type of investment property. But a growing family can settle into a single-family home for years. As always, you want to screen your tenants and try to find renters who will treat your property as if they owned it. And you want to keep a healthy, friendly line of communication with them to ensure you have a long-lasting, mutually beneficial relationship.
Is a Single-Family Home a Good Investment?
A single-family home, with the right location, timing, and strategy can make a great investment property.
Investment Property Type 4: Multi-Residential Property
Multi-residential property, of course, has a high cost of entry. They are valuable and fairly scarce in Toronto. This type of property has strong appreciation prospects and low-price volatility. Having multiple rentals in one property mean multiple revenue streams under one roof. Therefore, you can continue to generate rental income from some units while other are vacant or being renovated.
Renting Out Your Multi-Residential Property
Every multi-residential property and its location attract different types of renters. And each unit in the property will attract a different type of renter as well. There’s no one-size-fits-all approach to renting out a multi-residential property. However, there are some added considerations. You may have to maintain and repair a common area, manage garbage removal and lawn care, and consider how your tenants will engage with any shared space.
Is Multi-Residential Property a Good Investment?
For those who can afford the cost of entry, the benefits of owning and renting out a multi-unit residence are excellent. If you are in the market for this kind of investment, take your time, understand the market, and wait for the right property that suits your investment strategy.
Types of Investment Property Conclusion
For every type of investor there is an ideal type of investment property. We’ve been helping investors find, purchase, and manage their perfect rental property for over 25 years. If you would like assistance in investing in property in Toronto, please do not hesitate to contact our team today.
Find investment opportunities at realtor.ca.