The Toronto rental market has remained a highly lucrative market for landlords and property managers. However, as the market has become more lucrative, competition and inventory have increased. Instead of driving the price up, this free-for-all has caused the market to stagnate from its impressive highs to experience a dip recently, fracturing what pundits thought of the market.
For landlords and property managers who have watched the market intently, the rental market has taken a significant knock, displaying that frugality is the best way to hedge your investment.
Determining The Rent Price For Your Toronto Property
The first – and most important – step to leverage the Toronto rental market while being frugal is to determine how much you should charge for rent. This enables you to not only profit from the property but ensures you have consistent profit, even in a volatile market. While charging more may allow you to profit from your property at substantial interest, finding a happy medium means you’ll have a more consistent flow of income, which is ultimately a better deal.
To help you determine how much to charge for rent we at AntsLabor suggest you follow the following steps.
Explore the Rental History
Over the last year, the Toronto rental market has been rocked by COVID and bloated inventory, causing the market to reach the lowest rental prices in recent history and causing pundits to predict a rebound in 2022.
Therefore, if you are establishing your rent on historical data, focus on data from the past three to six months. This gives you an idea of what tenants are willing to pay. While revealing the true value of your rental property is.
Listen To Tenants
Unlike property owners, tenants have no vested interest in the Toronto housing market remaining robust. Most tenants are only willing to pay a premium if they feel they are receiving impeccable benefits. With more remote work opportunities and greater choice, tenants don’t need to fork out that premium to receive those benefits. So, ask long-term tenants what they are willing to spend on property like yours.
Base Your Decision on Longevity
Most landlords severely affected by the sharp decline in rental prices were taking advantage of the high rent prices.
When the market is robust, charging exponential rents can be tempting. However, market inclines are often short-lived. When times are bad – as was the case over the past year – many tenants with higher rents defaulted.
Considering you couldn’t evict tenants due to defaults, that rental loss compounded quickly. Furthermore, many tenants decided to move out in search of reduced rent prices.
Added to this cocktail – that is driving rent down – is the looming vacancy tax.
When you consider all the above, the frugal option is to charge a rent price that ensures you can pay your mortgage and attracts quality tenants that appreciate your reasonable rent.
However, many landlords cannot sustainably charge less in rent because of condo fees, mortgage costs, and the time spent managing the property. However, using a service like AntsLabor allows you to save both time and money. Therefore, it can help you leverage lower rental prices.
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