How to Rent an Investment Property in Toronto
Considering purchasing an investment property in Toronto, or already have one you’re thinking of leasing? With the rental market in Toronto picking up again, it’s a good time to do so. Here are a few things to keep in mind.
If you’re able to purchase an investment property, remember these tips:
- Do the math. Crunch the numbers on how much you need to charge monthly in order to pay your mortgage, utilities (if included in rent), and insurance, plus make a profit. Research similar rental properties in the area to get an idea of a reasonable asking price.
- The type of mortgage. If you’re purchasing and renting out a building with five or more units, you’ll need to qualify for a commercial mortgage. However, if you’re going to live in one of the units, your minimum down payment could be less than the standard 20%.
Choosing a neighbourhood
If you’re looking to purchase a house or condo in Toronto with the goal of renting it out, do your research on neighbourhoods. Decide whether you want to buy in a popular area, or if it’s better to look for up-and-coming areas, where you may be able to purchase a property for less.
Think about the property’s location from a renter’s perspective—is it close to amenities, like grocery stores and restaurants? Is the area walkable, or if a car is needed, what’s the parking situation? Is it a safe area for walking at night? All of these factors will help determine what you can charge for rent.
It’s important to look at the bigger picture when leasing an investment property in Toronto, rather than trying to make money quickly. As the pandemic has shown, you never know what might affect the market—but if you find reliable tenants, you can profit off your property in the long run through stable payments.
Finding the right tenants
Once you’re ready to rent out your property, finding the right tenants is the next step. There are many online platforms you can use to advertise a rental, or you can reach out to us for help listing your property. A few more tips for finding a tenant in Toronto:
- Spend time creating your listing. Be thorough in your rental listing to attract the right applicants. That means including information about pets, parking, location, outdoor spaces, utilities, etc., so people know what to expect. Good photography helps, too.
- Verify income and do a credit check. Once you’ve found potential tenants, you’ll want confirmation that they can pay their rent, whether by asking for proof of income, a credit check, or both.
- Ask for references. A great reference is invaluable. Ask if a previous landlord is able to speak to a tenant’s ability to pay rent on time and their reason for vacating.