Buying a Condo to Rent Out in Toronto as a First-Time Investor

Buying a condo you plan to live in and buying one as a rental investment require two different mindsets.

When you’re buying for yourself, you take your personal preferences into account more. When you are buying a condo to rent out in Toronto, you also need to think about the people who may eventually live there. Is the location convenient for the type of tenant you want to attract? Does the layout work well as a rental? What will it take to keep the unit occupied and managed after closing?

If this is your first investment condo, we can help you assess these questions.

How Buying a Rental Condo Is Different From Buying One for Yourself

It’s easy to look at an investment condo through the same lens you would use when shopping for your own home.

You might love the neighbourhood, the architecture, or the amenities in the building. A renter may be looking at completely different things.

For an investment property, consider how easy the condo will be to market once it’s available. Think about the type of person who is likely to rent it out and what might be most important to them.

If it’s a young professional working downtown, having transit access might be one of their main priorities. If they’re planning to stay for several years, they might care more about storage. 

Choose the Location Based on Tenant Demand

The same thing goes for location. Think about it from a renter's perspective.

Toronto rental demand can vary considerably from one part of the city to another. Del sees different renter profiles across the areas we manage. 

Downtown neighbourhoods near U of T, TMU, and the Financial District tend to appeal to students and young professionals, while Midtown neighbourhoods, like Yonge and Eglinton, usually attract renters looking for a more residential setting.

When evaluating a location, look at:

• Transit access
• Proximity to major employment areas
• Nearby universities, colleges, or hospitals
• Grocery stores and everyday amenities
• Walkability 
• The type of tenant commonly looking in the area

Look at the Condo Through a Renter's Eyes

Start by looking at the layout. Sometimes a smaller condo that has a more functional floor plan is better than a bigger one with an awkward or dated layout with wasted space.  

Some popular features renters look for include:

• In-suite laundry
• Storage
• Natural light
• A balcony
• Parking
• Building amenities
• A dedicated work area

You don’t need every feature under the sun to be there to invest. It’s more important that the unit suits the renter you expect to attract.

The same can be said for your decign decisions. Instead of decorating entirely around your personal taste, keep the space clean, like a blank canvas. Prospective tenants should be able to picture themselves living there.

Review the Condo Rules Before You Plan to Rent It

Not every condo will work as a rental. Make sure to review the building's governing documents and leasing procedures before moving forward. 

The Condominium Authority of Ontario notes that landlords and tenants have responsibilities under both Ontario's Condominium Act and Residential Tenancies Act. Plus, every condo building can also have its own rules for governing day-to-day activities.

Budget for More Than the Months When Rent Comes In

Even when everything seems to be going smoothly, there will be expenses with your rental condo. 

First-time investors sometimes focus too heavily on the monthly rent and underestimate costs that can come up throughout the year.

Account for expenses like:

• Condo fees
• Property taxes
• Insurance
• Repairs and maintenance
• Turnover costs between tenants
• Periods when the condo is vacant

Vacancy deserves serious attention. Even a condo in a prime location may sit vacant between leases. During that period, you’ll still have to account for regular property costs. 

Common Mistakes First-Time Toronto Condo Investors Make

Owning your first rental property has a learning curve. To keep that learning curve from being too steep, here are a few mistakes to look out for. 

1. Choosing the Condo Based Only on Personal Preferences

Again, this isn’t a condo you’ll be living in, so you’ll have to live with the fact that the condo you would personally choose may not line up with what renters in that neighbourhood are looking for. Consider the ideal tenant in the area and look for condos that align with them. 

2. Underestimating Vacancy and Maintenance

You won’t necessarily have a continuous stream of rent the entire time you own the unit.

Plan for turnover periods and unexpected repairs. Be aware that monthly rent won’t always offset the same expenses.

3. Rushing Tenant Screening

It can be tempting to get a tenant into your unit quickly if your unit has been sitting vacant. But rushing through the process is a huge mistake. 

If you rush, you might miss warning signs about that applicant’s rental history or employment. If the wrong tenant moves in, you could end up dealing with someone who can’t pay rent on time or who has a history of property damage. 

A few extra days spent properly reviewing an applicant can be far less costly than trying to fix a bad placement after the lease is signed.

Del’s tenant screening and placement process takes into account factors like credit, employment, rental history, and background information. 

4. Trying to Manage the Condo From Far Away

If you live outside Toronto, it can be much more complicated to manage a condo in town. The same thing goes if you travel frequently or don’t have much time to respond to requests. If there’s a maintenance issue, you might need someone to coordinate access to the unit. 

There are many ordinary responsibilities that come with owning a rental, from collecting rent to communicating with tenants when necessary. If you don’t have the bandwidth to manage them, you’re better off working with a company that can. 

Decide How the Condo Will Be Managed

If you self-manage, you’ll generally be responsible for pricing the rental, marketing it, screening applicants, collecting rent, coordinating maintenance, and turning over when there’s a new lease. 

Professional management transfers much of that work to a dedicated team.

At Del Condominium Rentals, we help Toronto condo owners with all of the above and more. 

Plus, if you’re a first-time investor, professional management can also provide local support when you don’t live near the property or simply don’t want your rental becoming another full-time responsibility.

Start With a Rental Evaluation

If you recently purchased a Toronto investment condo or are preparing to put one on the market, Del can help you understand what the unit may realistically rent for and what managing it will involve.

Our team works exclusively with condo rentals across Toronto and the GTA. We have decades of experience with different buildings, neighbourhoods, and renter markets.

If you’re interested in working with us, start by requesting a complimentary rental evaluation.

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