Purchasing a new home can be an exciting and oftentimes stressful experience. If you’re a first-time buyer ready to start your own condo search, be sure to check out the following tips!
Your Ideal Location
In purchasing a new home, deciding where you want to live is half the battle. It’s important to understand the dynamics of your new neighbourhood and to ensure that they are well-suited to your lifestyle. While some of us look for locations close to work, others might be looking to live close to schools, nearby shopping or public transit. If you are planning on renting your unit as an investment property, neighbourhood features and building amenities can significantly influence renter interest. Make sure that you are aware of the facilities available in your new area before you make your purchasing decision.
Your Price Range
During your condo search, you may find yourself forced to mediate between what you want and what you are willing and able to spend. Always stick within a price range that you can meet comfortably within the bounds of your financial resources. As a rule, costs of housing (your mortgage, property taxes, insurance, utilities and maintenance) shouldn’t go over 35% of your total net income. You will also want to consider additional costs that inevitably arise in condo ownership. Unexpected repairs, maintenance and hikes in condo fees can come as unwelcome surprises that might catch an unprepared condo owner off guard.
Preparing For Your Down-Payment and Closing Costs
Many first-time property owners are caught off-guard by last-minute charges included in closing costs. Closing costs, including taxes, legal fees, title insurance, closing adjustments, insurance costs and hydro-setup add up and it’s important to be financially prepared to cover these costs. Having a minimum of 2 to 2.5% saved away in your bank account should suffice in covering these costs, but keep in mind that closing costs do not include fees associated with cable, phone set-up, internet and other expenses.
Getting Pre-Approved For Your Mortgage
Once you know what kind of unit you are looking for, you’ll want to get in touch with a bank or mortgage broker and have yourself pre-approved for a mortgage. The knowledge that you have been pre-approved will let condo sellers know that you are financially prepared and committed to the purchase.
Will Your Unit Be A Rental Investment Property?
If you are planning on renting out your property in the near or distant future, you will need to familiarize yourself with the renting rules and restrictions of each building. Some condo buildings have bylaws that strictly prohibit owners from renting out their units, while others may enforce a number of restrictions, such as a mandatory minimum six month rental term. While there are some benefits to owning in an owner-occupied building, purchasing a condo with rental restrictions will significantly limit your options for the future.
As condo living in Toronto continues to expand, you’ll notice that living spaces are getting smaller and smaller. While it was only ten years ago that it was typical to find an affordable unit with 1000sqft of space, now the average condo sizes to just over 740sqft of space. With rising land and building costs coupled with HST, developers have limited options in keeping condo prices affordable. Despite the fact that units are shrinking in size, prices remain consistently high in order for developers to keep up with high building costs they face.
DNA Condos will be testing the compactibility of Torontonians with the development of their new King St.W project, expected to offer studio spaces approximately 270sqft in size. While the number sounds small, with good use of storage space and a strong layout, 270sqft might just be all the space you need!
Alternatively, many buyers have turned to older condo buildings in search of more space at an affordable rate. With the expense of maintenance fees however, older condos can turn out to be equally, if not more expensive as maintenance fees are typically higher. Older building maintenance fees are also expected to rise within the next few years, as much needed maintenance has been delayed in order to keep condo fees at an affordable rate.
With over 13,000 units on the market and the escalating costs of building, developers will continue to make smaller units in order to keep downtown Toronto living affordable. Future condo owners will have to consider how small they are willing to go for the opportunity to live in heart of the city.
Every year, the Ontario government releases its guideline on the province’s allowable rent increase for the following year.
For the year 2012, the maximum rate of allowable rent increase is set to 3.1 percent.
So… if your rent was $1000 in 2011, it can now go up by $31 a month in 2012.
What is the Rent Increase Guideline?
The guideline is the maximum allowable amount of increase in a tenant’s rent during the year, without requiring consent from the Landlord and Tenant Board.
How is the Guideline determined?
The Rent Increase Guideline is determined based on the Ontario Consumer Price Index (CPI), a measure of inflation calculated monthly by Statistics Canada. The Ontario CPI is considered the most objective and dependable measure of inflation, demonstrating changes in the pricing of all goods and services within the provincial economy.
Raising Your Rent:
For most property owners, the rental fee of a unit can be increased if at least twelve (12) months have passed since the tenant’s move-in date, or since his or her last rent increase.
Proper written notice must be provided to the tenant at least 90 days before the effective date of the rent increase.
Raising Your Rent Above the Allowable Increase:
Property owners who wish to raise their rent above the allowable increase issued in the guideline can apply to the Landlord and Tenant Board if their costs for municipal taxes or utilities have increased by more than the guideline plus 50 per cent.
The 2012 rent increase guideline is 3.1 per cent. Fifty per cent of this guideline would be 1.55 per cent.
To claim an above guideline increase related to municipal taxes, costs should increase by more
than 4.65 per cent (3.1 per cent + 1.55 per cent = 4.65 per cent.)
Exceptions to the Guideline:
Units located in buildings constructed after November 1st, 1991 are exempt from the maximum allowable rent guideline. If your investment property is located in a building constructed after that date, then your unit is not subject to the rent increase guidelines. Just be sure to raise responsibly or you run the risk of running into issues with the Landlord and Tenant Board.
Past Rent Increase Guidelines:
- 2011: 0.7%
- 2010: 2.1%
- 2009: 1.8%
- 2008: 1.4%
- 2007: 2.6%
- 2006: 2.1%
- 2005: 1.5%
- 2004: 2.9%
- 2003: 2.9%
- 2002: 3.9%
- 2001: 2.9%
When it comes to condos, there is little work to do in terms of preparing for winter. If your investment property is a house however, the winter season typically presents an array of issues including (but far from limited to) drafts, energy efficiency and furnace repairs. Luckily, there are a number of ways to combat the cold and winter-proof your rental home!
Loose fitting doors and windows can contribute a great deal to heat loss. In order to prevent heat loss, weather stripping should be fixed around the edges of doors and windows to ensure that they are properly sealed.
Regularly Maintain Heating Equipment
Regardless of the type of heating or cooling system you own, there are a few ways to ensure proper maintenance of heating equipment.
Many home owners neglect cleaning their furnace, however the number one enemy of your furnace is in fact, dirt! Dirt affects all three major parts of your furnace: the blower, motor and filter system. Your filter should be replaced or cleaned every season and ideally once a month during periods of frequent use.
How to check your filter:
Hold the filter up to the light. If it looks clogged clean or replace it for maximum efficiency with the accurate size (indicated on the side of the frame), regardless of how long you’ve been using it.
The blower assembly also must be cleaned regularly. If your furnace features a squirrel-cage can, its blower has a greater chance of becoming clogged. You can access the blower by removing the panel covering the filter for regular cleaning and maintenance.
Water Meter and Pipe Protection
Pipes and meters are prone to freezing in unheated areas. Freezing can be combated by ensuring that surrounding areas are sufficiently insulated. Be sure to also make sure that water to outdoor facets is turned off, water hoses are removed, and pipes have been fully drained.
If meters and pipes do freeze over…
Safety precautions should be taken when attempting to thaw meters and pipes. A flame can potentially start a fire or ignite a steam explosion- flames should not be used as a means of thawing meters and pipes. Instead, open a facet near the area that is frozen. This will facilitate the release of vapours from melting ice.
Control Water & Snow Accumulation
The accumulation of water and snow on rooftops can not only lead to a leak and the costly water damage that follows, but can also heavily affect the structural integrity of a home. It is important to remove snow from roofs and drains as regularly as possible to avoid costly long-term damages.
Check Attic Insulation
Just as the majority of body heat escapes from the top of your head, heat in your home escapes through the roof. It is wise to ensure that attic insulation is at least six inches thick to prevent heat loss.
Follow these useful tips to maintaining your investment property throughout winter.
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As a property management company, we receive a great deal of inquiries from property owners interested in renting out their units “fully-furnished” for the first time. One of the most common questions that we receive is “What exactly does a Fully-Furnished unit include?” For many, “fully-furnished” is a broad term that could mean anything from supplying the bare necessities to supplying everything but clothing and meals!
In response to this question, we’ve composed a comprehensive list of items that can and typically should be included with a Fully-Furnished unit.
Performance PM’s Fully-Furnished Checklist
- Couch and/or Pull-Out Bed
- Love Seat or Chair(s)
- Coffee Table
- Table Lamps
- Floor Lamps
- Window Curtains/Blinds
- Plasma TV with Remote/DVD Player
- End Tables
- Cordless Phone
- CD Player
- House Plants (while these add character to a room, not all potential tenants will be interested in maintaining them or they may even suffer from allergies to your plant!)
- Dining Table
- Chairs (2-6)
- Table Mats
- Artwork and Decoration
- Coffee Maker
- Kettle (electric and/or teapot)
- Garbage Can, Compost and Recycling Bin
- Oven Mitts
- Metal Roaster with Lid
- Mixing Bowls
- Measuring Cup
- Measuring Spoons
- Cutting Board
- Veggie Peeler
- Can Opener
- Mixing Spoon
- Knife Block Set
- Utensil Set/Holder
- Wine Glasses
- Cups & Mugs
- Linen Napkins
- Napkin Holders
- Bed Frame/Headboard
- Mattress Protector
- Duvet Covers
- Fitted Sheet
- Flat Sheet
- Extra Blanket
- Night table(s)
- Table Lamp
- Art Work/Decorations
- Clock Radio
- Cordless Phone
- Plasma TV with Remote & DVD Player (optional)
- Shower Curtain
- Curtain Liner
- Bath, Hand & Face Towels
- Toothbrush Holder
- Soap Dish
- Toilet Brush
- Toilet Cleaner
- Toilet Plunger
- Hair Dryer
- Hand Soap & Lotion
- Waste Bin
- Work Desk
- Desk Lamp
- Pen/Pencil Holder
- Filing Cabinet
- Waste Basket
- Floor Protector (particularly in case of roller chair)
- Blank Paper
- Outdoor Chairs
- Plastic Weather-Resistant Table
- BBQ with cover
- BBQ Utensils
- Toilet Paper
- Paper Towel
- Dishwasher Detergent
- Laundry Detergent & Fabric Softener
- Laundry Basket(s)
- Light Bulbs
- Garbage & Recycling Bags
- Tin Foil, Parchment Paper and Saran Wrap
- Batteries for Appliances
- Extension Cords & Sockets
- Upright Vacuum
- Cleaning Spray & Supplies
- Utility Shelving
- Iron & Ironing Board
While the majority of available apartments are typically unfurnished, some property owners choose to rent out their investment properties either partially or fully-furnished.
Benefits to renting out an investment property fully-furnished include not having to go through the hassle of putting furniture and appliances into storage, as well as being able to obtain a higher monthly income. Fully-furnished units are an ideal option for potential tenants who are either coming from overseas, looking for a short-term stay or who simply do not wish to pay a great deal of money upfront to furnish their rental unit.
An unfurnished condo is ideal for potential tenants who are already in possession of their own furniture or have saved up enough money to furnish the unit according to their own preferences and taste. For those with enough furniture to fully furnish their rental unit, having to put their possessions into storage and rent out a fully-furnished unit is both costly and impractical.
If you are planning to furnish your investment property, we cannot stress enough how important it is to invest in creating a well-furnished living space with good quality furniture and an overall strong presentation.
A well furnished property is not only easier to market to prospective tenants, but will rent out much quicker and at a significantly higher price point than a poorly furnished unit with damaged or worn furniture and ill-planned interior design. Keep in mind that a properly furnished rental unit can often attract a monthly income up to 15% higher than an unfurnished unit. Landlords who spend a significant amount on purchasing their investment property and feel forced to hold back on investing in good quality furniture and a strong design plan may be better off renting their investment unfurnished. Most prospective tenants are able to imagine the potential of an unfurnished “blank canvas” rental property- a poorly furnished unit with significant damages or wear and tear, however, leaves little to the imagination.
Recently, Toronto Star Moneyville columnist, Allison Griffiths, posted an article lamenting the day-to-day hardships of being a landlord. After receiving an ample inheritance, Allison and her husband made the decision to invest in a rental property, acquiring a 1940s-era character house that had recently been converted into a triplex. While Allison watched others around her succeed in profiting off their rental properties, she and her husband were eventually forced to fold under the pressure of managing a rental property and give up their investment.
The fact is that a rental property is a big investment and adhering to all the regulations, legal issues, tenant and maintenance needs can be a full-time job. More often than not, it is the best interest of the property owner to hire a knowledgeable and service-based Property Management team.
Here are six main reasons for choosing to use a Property Management team:
1) A Property Manager will ensure that your property is rented for the price it deserves
Finding a financially fit tenant is not always easy and property owners often find themselves settling on less than their unit deserves, hindering them from gaining a full profit from their investment. Ensuring that your property is fully appreciated by potential tenants and that they are willing to pay the price it deserves on time often requires the skills of a sales rep. A good Property Management company will be able to successfully advertise and represent your property.
2) Your investment property can be managed regardless of your location
If your rental property is near your home or business place, you will have little trouble keeping an eye on the property. If your rental property is not near you, or if you have chosen to invest in a property from overseas, managing it from afar can be a headache. Having a Property Management team that is local to your investment properties is key. They will be able address any tenant/maintenance issues immediately.
3) A Property Manager can facilitate all maintenance and repair so that you don’t have to
Unless you are personally skilled and/or knowledgeable about performing minor to major maintenance or repairs, locating a reliable and reasonably priced maintenance contact can be a daunting task. Find a Property Manager who has access to a skilled maintenance team that you can rely on.
4) A Property Manager handles all tenant communication and acts as an intermediary
Owning a rental property can sometimes mean 2AM phone calls, constant dialogue with tenants, and having to invest a great deal of time and energy into securing the satisfaction of your tenant. Hiring a service-based Property Management company means that all communication with tenants will be carried out in a positive and professional manner. You can decide how and when you would like to be informed, without having to maintain a constant dialogue with your tenants.
5) Property Managers help you maximize return on your investment
By making a commitment to employ a well-developed understanding of the current market, operating expenses and efficient budgeting, Performance TO is able to select suitable rental rates and ensure that you fully profit from your investment. As a company that is “service-based,” rather than “transactional based,” we strive to ensure satisfaction for all parties involved, owners and tenants alike. A strong Property Management firm should have an equally strong commitment to fulfilling the needs of both property owners and tenants and ensuring satisfaction on all ends.