Is It Time To Sell Your Investment Condo? - Part Two
Are you a condo investor in the GTA? Have you been looking at the real estate market lately and wondered to yourself when is the right time to sell? If so, you’re not alone. That’s why we’ve broken down this important question in two parts, so we can really get into the weeds on a critical decision you will have to make one day.
Last week, we looked at interest rate hikes and how that’s affected your mortgage payment. We also discussed cash flow and how it relates to your risk tolerance.
This week, we turn to options you as a landlord can do to reassure you if you’re not yet ready to sell:
Can You Increase the Rent?
One way to counter higher costs is to increase the amount of rent your tenant pays. In Ontario, landlords can increase rent once per year, provided 90 days written notice is provided to the tenant. If the rental unit was first occupied before November 15, 2018, the maximum amount it can be increased in 2024 is 2.5%.
However, if your investment property was first occupied on or after November 15, 2018, there are no limits as to how much you can increase the rent each year. If you haven’t increased the rent in the last 12 months, you should strongly consider it.
The Good News: Rents are Higher Than They’ve Ever Been
We’re still dealing with a huge undersupply of homes for rent in the GTA and that’s resulted in big increases to the amount of rent landlords can charge. This is good news for investors if your current tenant decides to leave and you can re-rent your property at the new market rents. But if your tenant has been with you for a long time and has no intention of leaving, those 2.5% annual rent increases won’t do much to help you absorb the increased costs.
We Have an Inventory Problem
Investment in dedicated rental apartment buildings has been lacking for decades and the GTA has long relied on mom-and-pop condo investors to fill the need for rental housing.
A report by the Building Industry and Land Development Association predicts that the Toronto region will have a need for about 300,000 additional rental units in the next 10 years – and is only scheduled to build 125,000.
That’s terrible news for renters who will face even higher prices – but it is good news for condo investors.
If you decide to sell your investment condo in 2024, remember:
1. You’ll have to pay capital gains tax on the difference between how much you paid for it, and how much you sell it for.
2. You’ll have to decide what to do with the money you get from the sale. Will you invest it in stocks or bonds? Buy another property? What are the risks and rewards of what you can alternatively do with your money?
3. Selling a tenanted property is very different than selling the home you live in. You may be surprised to find out that you can’t just ‘give your tenant a notice to leave because you’re selling the property.
4. Make sure to budget for selling costs: real estate commissions, lawyer fees and mortgage penalties.
5. Hire the right real estate agent who understands how to maximize the value of your investment condo in this market. Read their testimonials, talk to friends, and check out their websites! You can find mine here: www.BrianKondo.com. You can also check out my daily blogs, which include posts about investing in real estate. You can find my daily blogs at: www.BrianKondo.com/blog.
Making the decision to sell your investment condo is a personal one and will be based on a myriad of factors, as I’ve explained.
If you have additional questions, I’d be more than happy to chat through them with you to make sure you’re doing what’s best for you and your goals.
Thanks for reading today’s BLOG!!!
Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com
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