# The Landlord Business isn't looking too good.



## sags (May 15, 2010)

Pretty rough numbers in landlord rental land. People who bought property for rental recently are going to be subsidizing their tenants.

_The stats are now grim. There are 2,500 empty apartments in Cowtown for a 7% vacancy rate. That’s up three times in three years and at the highest level in 25. From a peak in 2014, rents have fallen between 25% and 35% – and are still declining. Landlords are throwing in free months of rent, paying moving expenses or coming over to give tummy rubs, all to get their units occupied. Condo prices, meanwhile, are traveling lower right along with lease rates.

Not just Calgary, either. Things are worse in Edmonton, in most of the Maritimes and Saskatchewan. In that flat province, for example, the apartment vacancy rate has bloated from 6.8% at this time last year to 9.4% today. The average rent is now below a grand a month. In Estevan, almost 30% of all apartments are unrented and unloved. In Saskatoon the vacancy rate tops 10%.
_

Garth Turner's blog.

http://www.greaterfool.ca/


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## Just a Guy (Mar 27, 2012)

It all depends on the price point you bought in at. If you paid $300k for a rental, you're in big trouble, if you'd bought in at below 100k/door you're probably fine in this market.

The same thing happens all the time in the stock market, or if you own a business. If you buy in at the peak, and over pay, you're going to get burned. Nothing special about real estate. 

There's a difference between being an investor and being an owner of what you consider an "investment".

It's actually probably a good time to pick up properties as a few "investments" get corrected.


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## none (Jan 15, 2013)

Now I just need to wait for this to happen in Victoria. Still crazy tight here.


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## familyman (Apr 6, 2015)

none said:


> Now I just need to wait for this to happen in Victoria. Still crazy tight here.


And everywhere else in the lower mainland. Rents shot up from $950 to $1250 in like 3 months! I've never seen so many houses with a for sale sign in my life!


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## Mortgage u/w (Feb 6, 2014)

Agree with Just a Guy. Will definitely have good buying opportunities coming along.
Still blows my mind how people manage to skew the housing market by overpaying a rental property. When they put that rental up for sale, it says a lot about its owner.


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## the_apprentice (Jan 31, 2013)

Mortgage u/w said:


> Agree with Just a Guy. Will definitely have good buying opportunities coming along.
> Still blows my mind how people manage to skew the housing market by overpaying a rental property. When they put that rental up for sale, it says a lot about its owner.


Recently spoke with a purchaser that understood he would need to have a down payment of 50% in order to break-even on the rental property. Needless to say, it was not a deterrent. :confused2:


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## STech (Jun 7, 2016)

For decades now Garth Turner has been screaming doom and gloom to sell books. They say even a broken clock is right twice a day, but I doubt Garth can tell day from night, let alone an accurate time.


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## peterk (May 16, 2010)

Hoping I can manage to swing getting a job in Calgary in the next couple of years, and take advantage of these crashing prices. I'm still in no hurry... Even if oil goes up it doesn't mean jobs will be running back full tilt, but if oil goes up they may raise interest rates and the dollar up too. Doesn't bode well for Alberta real estate, I think Calgary prices will languish for years to come even if oil fully recovers soon.


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## RCB (Jan 11, 2014)

It's a big country. Not all locations have large, rapid swings in values. Some of us can purchase multiple cash-flowing properties for what families in large citites pay for one SFH. An upcoming mortgage renewal will also drop the current interest rate from the rate received at purchase. Low vacancy rate means rents aren't far off those in the expensive RE cities.

As in everything, diversify. If a landlord is concerned, plow that cash flow into other investments. I wouldn't have equities if I didn't have a nice cash flow from rental properties. If a landlord doesn't have cash flow, they didn't choose their investment wisely. There are foolish people and speculators everywhere, not just in real estate.


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## naysmitj (Sep 16, 2014)

Yet the closer one gets to Toronto, the tighter the rental market. Our rental property in Niagara has appreciated and provides positive cash flow.


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## sags (May 15, 2010)

naysmitj said:


> Yet the closer one gets to Toronto, the tighter the rental market. Our rental property in Niagara has appreciated and provides positive cash flow.


I keep reading how people are moving away from where they work in Toronto to Hamilton, Niagara, Kitchener, Woodstock, London.

I think a few years of travelling down the 401 and QE will send them either looking for a new job or moving back to Toronto.

The "commute" is a nightmare. It can take hours on a good day and all day if there is an accident....and there are lots of those.

If I had to work in Toronto I would rather live in a shoebox condo than do that commute every day, especially in the winter months.


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## RCB (Jan 11, 2014)

Many non-GTA areas have a tight rental market. Many non-GTA areas don't build (or overbuild) condos. People here laugh at condo living, given the land available in this country. Additionally, rent control in Ontario, and perhaps other provinces, has stifled new apartment complex builds for decades. 

All with a 10 minute commute, max 20 minutes in heavy traffic, and substanially lower mortgage payments, less smog, less noise, and less stress.

To each his own.


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## Just a Guy (Mar 27, 2012)

Not only are rents down, there are still tenants like these out there with no legal ramifications...

http://www.cbc.ca/news/canada/toron...rent-goat-kingston-1.3872415?campaign_id=A100


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## sags (May 15, 2010)

The news says it was 18,000 pounds of garbage in the home (9 tons).

Hard to believe people live like that.


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## Just a Guy (Mar 27, 2012)

Haven't seen it that bad personally, but then I have people check in on tenants all the time. I have had to fill a bin or two in my time however, and have had tenants who are bordering on being hoarders. Haven't seen livestock though.


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## sags (May 15, 2010)

People can make you wonder.

We bought a nice home that looked immaculate until we moved in and it was empty.

Dressers had hidden holes in the walls all over the house. 

Every bedroom carpet had been laid around the waterbeds, leaving a big empty square in the middle of the rooms.

Some of the downstairs paneling was put up sideways and the wallpaper was upside down.

Incredible the things you don't notice when you are looking at a home.

Friends of ours were buying their first home at the same time, and when they took possession everything was gone.

The kitchen cupboards, cabinets, sinks, toilets, lights...........even the bathroom tissue holders...........all gone.

They had to take the owners to small claims court and only received partial payment because for some things that aren't written in the sales contract.........tough luck.

I talk to our maintenance guys all the time and from the stories they tell me, I don't think I could be a landlord.


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## Mortgage u/w (Feb 6, 2014)

sags said:


> I keep reading how people are moving away from where they work in Toronto to Hamilton, Niagara, Kitchener, Woodstock, London.
> 
> I think a few years of travelling down the 401 and QE will send them either looking for a new job or moving back to Toronto.
> 
> ...


The numbers and theory is showing that people who moved away from the larger cities are actually coming back. With a rapid increase of an aging population and longer life expectancy, those retirees who moved to a rural setting are realizing they are lacking amenities and conveniences such as medical care, can no longer drive, etc. For this reason, the prediction is that the aging population will be favoring smaller dwellings in city cores therefore the demand for condos and multi-unit homes will be on the rise. I wouldn't bail out of being a landlord just yet!


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## Saniokca (Sep 5, 2009)

Here is an actual example of how I'm being subsidized by my landlord. An identical apartment a few floors above is listed at 330k (similar apts were listed and sold for similar prices in the past year). I am ignoring any down payment since that could be invested for a return. I am also ignoring the buying/selling costs which would only help me I think. This a one-bedroom apartment in GTA.

price 330,000 
interest	3%	
interest/yr 9,900 
interest/month *825 *A

maintenance/m *900 *B

taxes	0.50% - this item is just a guess - not sure how accurate this is	
taxes/yr 1,650.00 
taxes/month *137.50* C


cost per month 1,862.50 A+B+C
rent 1,550.00 (this is what I actually pay and includes all utilities including cable but not internet/phone).
subsidy 312.50


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## Mukhang pera (Feb 26, 2016)

Saniokca said:


> maintenance/m *900 *B


What accounts for such a high monthly amount for maintenance on a $330k unit?


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## Saniokca (Sep 5, 2009)

Mukhang pera said:


> What accounts for such a high monthly amount for maintenance on a $330k unit?


older building - believe it or not it hasn't really been increased in the last few years! From now on the increases should be quite substantial. Also from what I know the fund is pretty much at zero (they even had a special assessment earlier in the year to cover some repairs).

I don't know who buys these units at such prices - do they research about the fund? Do they look at the maintenance fee line?


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## Mukhang pera (Feb 26, 2016)

Well then Sanioka, just sit back and enjoy the rent subsidy!

It does look like the L/L failed to do some basic research and calculations.


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