Rent a condo?

Renting a condo can make more sense than buying one.

In some of the downtown Toronto condos, up to 85% of all the units are bought by "investors" who have no intention of living in them. They either plan to flip them for a quick profit, keep them for a few years and rent them out. They hope to make money in capital gains when prices go up.

In 2006, there were 41,749 rented condos in the area, according to figures from the Canada Mortgage and Housing Corporation. By last year, that number reached 77,255 and continues to grow.

This means there are a large number of condo owners who are looking for good tenants and that will help to keep rents in line.

Renting an older condo
The rents are cheaper, especially if you look outside the downtown areas. A twenty to thirty minute subway ride can result in far lower rents.

Renting—the up side
There is a large supply of rental condos, with more coming on the market every month, so there is lots of choice. You can pick the building that has all the amenities that you think you will use  at a price you can afford.

Risk free
Living in a condo for a year gives the renter a good feel for how well the building was built, how it is managed and maintained. You also can tell what type of people are attracted to the building; seniors, young people, families, students or short-term renters..

If the walls are so thin you can hear the residents next door talking on their phone or urinating in the toilet, your windows have water leaks or mould or if there are parking problems, you will know this is not the place for you.

On the other hand, if you like the apartment, your neighbours and the area, you can purchase with confidence.

It's cheaper
In the downtown core, there were 600 condo units rented out through the MLS system in March 2013 and so far the rents have remained steady. Here is, on the average, what your money gets you:
$1,400 studios and bachelors
$1,500 one bedroom without parking or den
$1,900 one bedroom plus den and parking
$2,500-$3,000 two bedrooms
$4,000 three bedrooms
Sure that is not cheap but once an "investor" has absorbed the down payment, the occupancy costs, annual property taxes, monthly condo fees, rental agent fees and maintenance on the unit he often finds that the rent does not cover his costs and he is subsidizing the renter to live in his condo.

If mortgage rates go up, if there are any special assessments, if the condo fees go up or the refrigerator breaks down, the landlord absorbs the costs.

Special assessments are always a possibility. It was assumed that they only happened in older condos where the owners neglected to properly fund the Reserves and maintain the property but new condos can be plagued with construction defects and condo fees which were artificially kept too low by the builder.

Special assessments costing tens of thousands per unit are not unheard of. These are not a renter's problem; they are the owner's problem.

Think the owner will just raise your rent high enough to make a profit? Well any increases are negotiable, are they not? As a renter, you have the power to keep any rent increases within reason especially if you are a good tenant who always paid your rent on time, didn't cause any trouble with your neighbours, or the board, and kept the unit in great shape.

The longer you rent the apartment, the more your landlord may be out of pocket.

Renters have rights
The Residential Tenancies Act gives tenants many rights and if the landlord violates them, the renters can contact the Investigation and Enforcement Unit (IEU) of the Ontario Ministry of Municipal Affairs and Housing.

There are tenants' rights groups and tenants' associations that post their rights on their websites, answer most common questions and are glad to help.

Some conditions apply
A renter and the renter's guests must obey the provisions of the Condominium Act and the corporation's declaration, by-laws and rules. Make sure you get a copy of these documents from your landlord.

Make sure that you comply with the condo's rules about pets.

Some condo landlords do not include the unit's locker or parking space in the rent. They plan to use them for their own use or they rent them to other residents.

There are landlords who expect you to share the unit's mailbox with you and will keep a key so they can clean out their mail once or twice a week. If you don't like having your landlord sorting through your mail, let them know that you will be changing the lock on the mailbox. You can put the old lock back on the mailbox when you leave.

Check the apartment carefully and note all pre-existing damage and defects in the unit and have the owner verify, in writing, that they exist.

 Get all of this straight before you sign the lease.

Renting—the down side
When you rent a unit in a traditional rental building, you can remain in the unit as long as you keep up the rent payments. There are people in Toronto who have happily lived in the same rental unit for over thirty years.

However, when you rent a condo, you can be asked to leave when your lease expires. If the owner wants to move in, you may have to move out with only 60 days notice.

However, chances are there are several units for rent inside the same building you are already in so you won't need a moving truck.

Some landlords in Toronto's condos are demanding key deposits of up to $500 and when the tenants move, the landlord changes the locks and refuses to return the key deposit. Other tenants face huge rent increases to cover increased maintenance fees.

Some owners demand a full six months rent in advance of a tenant moving in. Newcomers to Canada pay up as they need an address and they do not know their rights.

A few condo boards demand that tenants pay a fee, up to $150 to book the elevator for a move while others charge $50-100 an hour for a security guard to monitor the move.

Be aware
Most boards will not authorize repairs in a rented unit that is the responsibility of the owner. Nor will they assist renters with any issues they have with their landlords. The condo management will only deal with the actual owners.

Rent controls
All rental stock in Ontario, including condos, are now covered by rent controls. That makes renting a condo even more attractive.

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