A condo landlord’s headaches
Being a landlord of a condo unit, either townhouse or an
apartment, is not all peaches and cream. There is a lot to worry about.
Cash flow verse appreciation
Depending on how much you put down on your rental condo unit(s), the
rent you collect may not pay all of your monthly expenses. In effect,
you may be subsidizing your tenant to the tune of $100 to $200 a month.
Many condo landlords are content to do so as they expect the raising prices of condo units to generate a healthy return.
The problem arises when condo unit prices peak and there are no price increases. Worst will occur if prices start to decline.
A landlord's profits or losses are based on municipal tax rates,
mortgage costs, unit maintenance costs and the monthly common element
Monthly common element maintenance expenses that rise faster than the rate of inflation is a big concern to condo landlords.
These always come as an unwelcome surprise and can create unacceptable negative monthly cash flows.
Introduced in 2017, this is another setback for landlords. The rent
increases that you can charge an existing tenant is set by the Ontario
government and no, or at least little, allowance is made for the
landlord's increased expenses aside for improvements made to the unit.
Landlords will now hope that existing tenants will not stay for the
long term as when a rental unit becomes vacant, the landlord can charge
whatever rent a new tenant is willing to pay.
If tenants move out every year or so, the landlord gains the ability to
lease the unit to a new tenant at the current market rates.
However, most likely the unit will be empty for a minimum of one to
three months while the unit is painted and minor repairs made. Then
there are the costs involved in finding a suitable tenant.
This lack of income and extra costs must be included in the landlord's profit and loss calculations.
Depending on the condominium's declaration, many landlords had
the option of furnishing their unit(s) and licencing them short-term
like hotel suites.
Short-term rentals, rented out directly by the landlord, or through
Airbnb or other online services, can offer returns far better than they
can get from leasing long-term.
However, the City of Toronto, starting in June 2018, is banning
short-term rentals in any housing unit that is not the host's primary
However since the by-law inspectors may not have the manpower, or will,
to enforce the by-law, condo short-term rentals may be with us for a
Tenants from hell
This is a landlord's nightmare. A badly damaged unit, a tenant that
fails to pay his rent, a tenant that games the Landlord-Tenant tribunal
in order to live rent-free for months can result in big loses.
Best bet to limit your exposure to bad tenants is to hire a professional rental manager to manage your unit for you.
Disputes with the board
Now this is a problem that blind-sides most landlords.
If your tenant has loud parties, parks his car in front of the lobby or
feuds with his neighbours, it is you who will get the warning letters
from the board and then the expensive legal letters from the
I saw one landlord hit with over $50,000 in legal costs, both the condo
corporation's and his own, when the condo took him to Superior Court
because his goofy tenant's dog wouldn't stop barking.
Want to sell?
The unit has to be empty if you want to sell it for market price.
Having a tenant living in the unit will make it difficult to sell,
especially if the tenant is a slob or if the tenant makes it difficult
to book showings.
Having dirty underwear on the floor and unwashed dishes in the kitchen
should either turn the potential purchasers off or drive down the
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