Rents are up more than you think – 7 things to do before your re-rent your unit
Real estate news headlines are always about the sales numbers but for 2018, we think the real story is rental appreciation. While the overall numbers have consistently stated that Toronto rents have gone up over 10% year over year, we define it differently and get different numbers. But generally, for the downtown core, the number is 11.2%.
As professional investors, it’s important that we look at some of the deals we did and see just how much some of the properties we recently re-rented for and how much we were able to increase the rents in our portfolio. None of these units were upgraded from one tenant to the other.
184 Munro Street Studio 3 – 55.9% increase over two years averaging 27.9%
2 Bedroom featured in blog TO
2016 – $2900
184 Munro Street Studio 2 – 15% increase in under a year
2018 – $2300
2017 – $2000
55 regent park 2006 – 13.3% increase
Studio – 1 bath
2018 – $1,700
2017 – $1,500
75 east liberty 2219 – 12.5% increase
1 Bed + den – 1 Bath
Here are 7 things to do before you re-rent your unit:
Maximize your exposure – We get great tenants from multiple sources. MLS is the dominant one but there are other online services to promote your listing too. There is no disadvantage to listing across different platforms.
Thank your tenant and let them know you’d be happy to be a reference – Most of the time your tenant doesn’t have a new place yet and they will be more co-operative if they know you are helping them. This will help with showings, them being positive to perspective tenants and keeping the place clean.
Make sure it’s in writing – If a tenant tells you verbally ask them to send you an email in writing. Many landlords request that the tenant complete an N9 form. In most cases a written email specifying the vacating date will suffice but under no circumstances would a verbal notice be sufficient as this could cause a serious problem later if the tenant changes their mind and doesn’t want to leave.
Inspect the unit – Before new prospective tenants see your unit you want to verify the unit is in good condition, if there is damage now is the time to address it with the tenant. You will want to do another inspection after they move out.
Don’t under rentit – Check the comparable units rents closely. You don’t want to increase the price to much but with the vacancy rate in Toronto under 1%, many landlords can’t believe their rents are up as much as they are and are actually under pricing their rents.
Never negotiate down the monthly rent – give a couple of weeks or even a month free if you must but keep your monthly rent high. With new rent controls you won’t be able to increase the rent later beyond a couple percent. So, make sure to get top dollar now and those few weeks may pay itself off in a year.
Consider furnishing – none of the units we mentioned were furnished but we are getting higher rents and great tenants for furnished units. Best of all, furnished units tend to have higher turnover, so you don’t keep the same tenant too long. Certain properties and locations are better fits for the furnished rental market than others.
The bottom line is as landlords there is really no better email to receive from a tenant than them giving you their notice they are leaving their unit. If they have been there more than a year, you are possibly looking at a 10-20% plus rental increase the next time around. Do research, speak to an expert and make sure you maximize your rents.
A GO train leaving Union Station in Toronto roars past the elevator block rising for the first tower of Ivanhoé Cambridge’s 2.9-million-square-foot CIBC Square. The tower, one of many in the works in downtown Toronto, is slated to open in mid-2020 and is already fully leased.