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There’s a perception out there that Toronto Landlords are raking in money at the expense of tenants. No doubt, we have an affordable rental problem in Toronto..but are greedy Landlords the problem?

We help over 100 TorontoTenants find a home each year, so we’re not naive to the challenges of renting in Toronto. But we help a lot of Landlords, so we’re well versed in the challenges of being a Landlord too.

Today, we’re looking at Toronto’s rental market from the Landlord’s perspective. 

Fact: Most Toronto Landlords don’t break-even on a monthly basis.

In Toronto, it’s extremely difficult for a Landlord who bought in the past few years to break even – in fact, many Landlords operate on a negative cash flow basis, meaning that the rent they receive from Tenants doesn’t cover their monthly expenses.

Example: 1-bedroom condo in a popular Liberty Village, sold in 2019:

  • Purchase price: $565,000
  • Downpayment: $113,000 + $15,500 in land transfer tax ($128,500 total investment)
  • Interest Rate: 3%
  • Rents for: $2,300/month + utilities

Mortgage: $2,319 (Amortized over 25 years at current  interest rate(

Condo Fees: $422. 19

Property Taxes: $180

Insurance: $50

Utilities not paid by Tenant: $0

Total Monthly Expenses: $2,971

Monthly Rent: $2,300

Total Monthly Loss: $671

 

When a Toronto Landlord IS cash-positive, it’s usually $50 or $100 per month – which can quickly evaporate when something needs to be fixed or replaced. And in the event that the Tenant stops paying rent or causes significant damage? It can mean serious financial consequences for the Landlord. 

So why do Toronto Landlords buy money-losing properties? They invest in the hopes that the property will appreciate in value – and while we’ve been on a great real estate run, increases in value are far from guaranteed…just like the stock market. Greater risk = greater return. 

For the most part, Landlords are just normal people making an investment. They aren’t big faceless corporations with unlimited $$.

Fact: Being a Landlord is risky – and evicting Tenants for non-payment of rent is extremely difficult.

In Ontario, a Landlord can evict Tenant “for cause” for the following reasons:

  • Not paying the rent in full
  • Causing damage to the property
  • Disturbing other tenants or the landlord
  • Illegal activity in the rental unit

The eviction process is long – and generally favours the Tenant.

Tenant Eviction Process for Non-Payment of Rent

  1. Provide notice of end of tenancy by completing the N4: Notice to End a Tenancy Early for Non-payment of Rent and providing it to the Tenant the day after the rent was due.
  2. The Tenant has 14 days to pay the rent. 
  3. If the Tenant does not pay the rent, the Landlord can apply to the Landlord Tenant Board for an order to require the Tenant to pay the rent by a specific deadline and evict the Tenant if they do not pay within that timeline. 

Delays to the eviction process and hearing are common and average 28 days; the average eviction process takes a further 75 days, on average in Ontario.

Fact: Landlords charge market rent – the amount that Tenants are prepared to pay. 

I followed a discussion on a neighbourhood Facebook group last week: a Landlord has posted their newly renovated 2-bedroom apartment for rent, for $3,500 a month. They were quickly attacked and accused of being greedy by taking advantage of the current market conditions. 

Here’s the deal: I don’t think that apartment is worth $3,500/month and I predict it won’t rent at that price. The market is smart – when properties are underpriced, they get multiple offers and the price increases above the asking price; similarly, when properties are overpriced, they sit on the market and the Landlord eventually has to reduce the price in order to rent it. 

A Landlord is an investor – their goal is to make money. And just like employees seek to maximize their salaries vs. help their employer by taking less money, Landlords seek to maximize their investment to the extent the market will bear, just like any business.

Landlords don’t arbitrarily set the rent prices – Tenants have to agree to pay it.

Fact: We have a supply/demand problem in Toronto. 

Do we have a housing problem in Toronto? Of course we do. 

A city this size can’t neglect building purpose-built rental apartments for 40 years and be surprised that there isn’t enough rental housing stock to meet the demand. That, coupled with restrictions on building second apartments has resulted in a shortage of rental apartments. 

Rapidly increasing property prices has further made it more difficult for first-time Buyers, thus forcing more people to rent vs. buy…thus increasing the demand for rental properties. 

Low supply + high demand = increasing prices.

Fact: A Landlord invests in a property to make money – not to perform a public service.

We think the City of Toronto and the province of Ontario need to address affordable housing – but this isn’t a burden that should be borne by individual Landlords, who are usually just normal citizens too, not giant faceless corporations. Without Landlords, we’d be facing an even bigger supply/demand problem: recent studies show that nearly 40% of Toronto’s condominiums are not occupied by the owners. Without individual Landlords, we’d have a WAY bigger problem. 

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