Benefits of Renting Out Condo Apartment

Renting out a condominium in Toronto can be a lucrative investment strategy, given the city’s vibrant real estate market and high demand for rental properties. However, like any investment decision, it comes with its own set of advantages and challenges. Here are the pros and cons of renting out a condo in Toronto.

What are the benefits of renting out a condo as an investment property? Is a rental condo apartment a good investment?

Well, that depends on the market you are located in. Lets say, if you are interested in renting out a cash flow property in Central Toronto or Downtown, you might be better renting out a condo Apartment. So what are the benefits of renting out your condo?

In this article we’ll review all the benefits of renting your condo with a complete list of both Pros and Cons that renting out a condo might have for a real estate investor.

It goes without saying that financial stability works wonders for you in pretty much all aspects of your life. There is a myriad of ways to become financially stable, with each having their own pros and cons that you should look out for. One secure and prospective way is owning rental properties. A condo realtor, knowing the ins and outs of the business, can facilitate the process of owning a rental property. This is where we can help you out.

Pros of Renting Out Your Condo

Toronto is riffed with investment opportunities, among which, investing in rental properties is the safest one for obvious reasons like a constant flow of income. There are, however, a few pros that people don’t know about and as a result, hesitate to start investing in a property and rent it out. We, as your trusted condo REALTORs, suggest the following advantages of renting out a condo to make you sure of your decision.

1. Counter the Inflation

Inflation rate rising, you can counter this by investing in condos, their value in Toronto in the past have exceeded the inflation rate. This means granting you a lucrative investment, over Bonds or Mutual funds or some stocks. You can see this trend if you look at the TREB’s average condo price trend since 1996 up to the date that this article has been written. There have been fluctuations in the average price and sales, yet by looking at the broader picture and comparing average inflation rate to average condo price appreciation in Toronto you see the delta between those two numbers, that the condo owners has been way ahead of the inflations.

     2. High Demand in Toronto Rental Market

Toronto is filled with renters and condos have taken the spotlight, therefore, you will have an easy time renting out your condo (Days on the Market changes depending on the location).
If you look at the increase in population statistics, you’ll have a better idea of how the current demand would increase in the future years.
Each year over 115,000 people on average come to the Greater Toronto Area and that number has been increased over the time.

          Toronto’s population continues to grow, contributing to a consistent demand for rental properties. The city’s diverse job market and                   educational institutions attract a steady stream of tenants, ensuring potential occupancy for condo owners.

3. Upgrading Condo’s Value

Maintaining and upgrading your condo will increase its value, such as repainting, refinishing. Generally speaking, refinishing and upgrading a condo in Toronto is cheaper than a house, since many upgrades that are outside of your units, e.g. roof, landscaping etc., would be done by the condo corp.

4. Tax Benefits

Renting out your condo comes with tax benefits. By the guidelines of The Canada Revenue Agency, you can deduct expenses related to your rental property in these categories: necessary expenses, improvements, depreciation (if any), the interest portion of the mortgage, maintenance fees, etc. *

5. Lower Maintenance Fees

The Condo Management takes care of most of the management and maintenance problems, so you won’t be bogged down by such hassles. Condo property managers are a huge relief when it comes to addressing the  building maintenance. That’s one of the reasons people prefer to rent out a condo over a house.

        6. Lower Maintenance Responsibilities

The Condo Management also handles common areas and amenities like courtyards and swimming pools and they are the ones who address issues, or repair and maintain those areas.

          Condo owners typically have fewer maintenance responsibilities compared to owners of detached homes. Many condo corporations                  take care of exterior maintenance, landscaping, and common area upkeep, reducing the burden on individual landlords.

7. Deduct Your Expenses

If you rent out your Toronto Condo seasonally, you can use it for 14 days per year (or 10% of the number of days you rent to others at a fair market price) and still deduct your expenses.

8. Risk Protection

You might already have money in the stock market. However, owning a rental Toronto Condo allows you to diversify your portfolio. This can serve you as an added layer of risk protection. It may also assist you in capitalizing on positive market swings.

         9. Potential for Appreciation

Condominiums in desirable neighborhoods often experience appreciation in value over time. This can result in capital gains when you             decide to sell the property in the future, providing an additional source of profit.

        10. Amenities and Location

Condos often come with attractive amenities such as gyms, pools, and communal spaces. Additionally, many condos are located in                    prime areas with easy access to public transportation, shopping, and entertainment, making them appealing to potential tenants.

Cons of Renting Out a Condo

It’s not all sunshine and rainbows, you shouldn’t gloss over the potential cons of renting out a condo, the following is a list that you should keep in mind:

1. A Big Deal for Beginner Investors

Investing in a rental property is a big deal for a beginner investor as it will take a good chunk of their assets. Having a significant portion of your money invested in a rental property is a huge deal for a beginner. So if you just started in buying and renting a condo as an investment property, you should be careful.

2. Paying Struggles

You might find yourself struggling with the tenants, over paying their rent, as there’s no guarantee that they will pay their rent on time. In addition, they might be messy or needy, making your life a bit difficult.
Of course with a proper Screening of the tenants, you can avoid many problems from the beginning, however there are still chances that you don’t find the right tenant and you still have the challenges.

Often location plays a key factor in this equation as well, let’s say, if you are looking to rent your property to students, or create a student rental portfolio, you should target investment properties near universities or colleges, on the other hand if you want to rent your property to professionals, maybe areas closer to Toronto’s Downtown Core would be a better option for investing.

In any scenario, a top Toronto real estate agents can help you with locating the best options with the highest potential returns. Also a Toronto Realtor can help you with finding you a tenant and screening them before you sign a lease with them.

3.Real estate lacks liquidity

Wrapping up a sale, even in the best-case scenarios, might take at least a couple months or more. Therefore, emergencies and some other unforeseen events might make you resorting to a fast but not a very profitable deal.

4. Be Temperament to Be a Landlord

You may not have the temperament to be a landlord. Just like any other job or position, being a landlord comes with its own quirks that some people are good at handling them and some are not. For instance, if you’re a shy and highly agreeable person, you might not muster up the courage to increase rents or avoid warning your tenants because you don’t want conflicts.

5. The tax code is subject to change

The tax code is subject to change. It may change in ways that lessen or eliminate some or all of the tax benefits associated with homeownership and flow-through enterprises.

        6. Monthly Fees

Condo owners are usually required to pay monthly maintenance fees to cover building amenities and services. These fees can impact                  the overall profitability of the investment and should be factored into the financial calculations.

        7. Potential for Special Assessments

Condo corporations may impose special assessments for unexpected repairs or improvements. These one-time expenses can be                           significant and are an additional financial consideration for condo owners.

        8. Tenant Turnover

High tenant turnover can be a challenge, requiring landlords to spend time and resources finding new tenants, conducting background             checks, and managing the turnover process. This can lead to periods of vacancy and potential income loss.

         9. Market Fluctuations

          Real estate markets can be subject to fluctuations, affecting property values and rental rates. Economic downturns or oversupply in                  certain areas may impact the profitability of renting out a condo.

Now you have an idea of what are you gonna get from renting out your condo and what you shouldn’t gloss over. Owning a rental property is a promising strategy for diversifying your investments, reaching the desired financial stability. To get started, besides factoring in the points mentioned here, you will need a Toronto condo real estate agent to guide you through this profitable journey as there might be specific complications you’re not ready for, so a condo realtor can make sure you won’t get flustered along the way.

Read More : Best Condos In Toronto

Renting Out a Toronto Condo as an Income Property

An income property is one that you buy with the intention of profiting from renting or leasing the space to others.

Any type of Toronto real estate, from condo apartments to farmlands around the GTA, is eligible to become an income property as long as a tenant rents it from you. These kinds of Toronto real estate investments can help diversify a portfolio or generate long-term retirement income.

Read more: Best Tips For Renovating Your Condo in Toronto

Renting Out Toronto Condos for Income

Individual Toronto units in a condo building or complex can make excellent income properties since they are relatively affordable, tend to rise in value, and provide conveniences and a wide range of amenities.

Furthermore, the homeowners association (HOA) of the condo community normally exists to help handle certain parts of the property that would otherwise fall to the landlord in a non-association house, such as general upkeep, exterior maintenance (mowing, snow removal), and so on.

Conclusion

Renting out a condo in Toronto can be a rewarding investment, but it’s essential to carefully weigh the pros and cons. Understanding the local market, evaluating financial considerations, and being prepared for the responsibilities of a landlord are key factors in making a successful investment decision. Before entering the rental market, consider seeking advice from a Toronto real estate agent and financial experts to ensure you are well-informed and positioned for success in Toronto’s dynamic real estate landscape.