Toronto Income Property Newsletter - December 2011

Season’s Greetings everyone! I would like to wish you, your family and all your friends the warmest wishes for a safe and happy holiday season. I'm looking forward to taking some much needed down time over the upcoming break. For those of you who don't know, I built an audio recording studio in my basement this year, so I look forward to hanging out with some of my musician friends to make some noise. I'll be back in January with a detailed look back at the income property market in 2011 as well as predictions for what we can expect in 2012. Take care and all the best.

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As many of you who follow my postings are aware, the Toronto income property market has essentially been hot all year long. At a time when the overall economy is still suffering, unemployment in the US is at all time highs and Europe is on the brink of a financial collapse, it is quite paradoxical that our market continues to be so hot. Interest rates are low everywhere so that doesn't fully explain why the Toronto market has been so robust. I still believe that Toronto is a magnet for new immigrants and the lack of quality rental inventory has made the existing stock more desirable. I can verify first hand since I am in the field daily that there have been fewer duplexes and triplexes for sale over the past three months than I would have expected.

October existing home sales in the greater Toronto area market soared 17.5% from a year ago, the Toronto Real Estate Board says. The Toronto market numbers have been credited with boosting the national average price at a time when the Vancouver market has slowed. Jason Mercer, the Toronto Real Estate Board's senior manager of market analysis, says "seller's conditions" are in place throughout many parts of the GTA. "Thanks to low interest rates, strong price growth has not substantially changed the positive affordability picture in the city of Toronto and surrounding places," said Mr. Mercer.

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We all know about Riverdale, the Annex, Little Italy, Bloor West Village and all the other tier one rental neighbourhoods in central Toronto. But have you tried to buy a duplex or triplex in one of these areas lately? It is almost impossible to find anything decent in the $500K range. It is still even
tricky in the $600 range. If the rents in these areas don't increase proportionately to the sale prices (which they often don't) then as the prices increases the investment value decreases. It is ideal to buy something for under a half a million since these properties usually provide better bottom line returns.

So where are all the plexes for under $500K?

If you work hard and put yourself at the forefront of all buyers by staying on top of the market, you can still find properties in the $400K range, I will look at three areas that may be particularly interesting to the income property investor. I have mentioned these neighbourhoods before in past newsletters and I still believe very strongly in them. These are neighbourhoods that I have spent lots of time over the last few years getting to know better, surveying the rental market and their demographics.

These are areas to keep zero in on if you are looking to land between $350K & $500K.

i. Leslieville 

This is the area in between Carlaw and Coxwell, from the railway tracks just north of Gerrard down to Eastern Avenue. Leslieville is situated around three of the more popular east districts, namely the Beaches, the Danforth and Riverdale, which are all popular rental destinations. The Toronto Film Studios on Eastern will be transformed into retail in the future. Little India on Gerrard has become a very popular spot.  Given the proximity of Leslieville to downtown, the Gardiner & DVP and all of the amenities that the East side offers, many new owners have been renting out their properties. Leslieville is well served by the public transit system which operates buses and streetcars on Carlaw, Jones, Greenwood, Eastern as well as Gerrard and Queen Streets. Most of these bus routes link up with stations on the Bloor-Danforth subway line, which is of great benefit to renters.

ii. The Junction

The Junction Triangle located just northeast of the Annex is bounded on three sides by railway lines that enclose the entire neighbourhood in the shape of a triangle. The key boundaries are Dupont and Bloor to the north and south, and just west of Lansdowne over to Dundas Street West (which curves north by this point. The main streets are Perth, Symington, Wallace and Campbell. Like Leslieville, the Junction is ideally situated in between two very popular rental areas, namely the Annex and High Park. Most of the housing in the Junction has already been converted to two and three family dwellings - with numerous choices of inventory relative to other pockets of Toronto. I have seen new loft developments in the Junction as well as many new businesses opening up on Bloor Street West. Given that it's only ten minutes to downtown and it sits on the Bloor subway line, this has become one of the top areas for renters.

iii. Belgravia &  Dufferin/Eglinton

 This is the area just west of the Allen Expressway going north and south of Eglinton Avenue West up to Lawrence - the main artery being Marlee Avenue running north to south. The interesting characteristic of this area is that it is adjacent to some of the finest homes in Toronto to the east. The creation of the Forest Hill Lofts and adjoining condo town homes on Castlefield shows that the development has now moved over to the other side of the Allen. The proximity of the subway going up to Yorkdale and to downtown is quite attractive to renters. There are many income properties already in the area that can be purchased for lower prices than properties to the East. I have also seen custom homes starting to be built in this quadrant as well, suggesting the buyers are interested in moving further west heading towards Dufferin.  South of Eglinton, going east and west of Dufferin down to Rogers Rd. still offer relatively affordable prices.

For the real estate investor who is looking for a long-term situation and does not have an abundance of start-up capital to invest, these areas can provide quite a profitable solution. They have become more popular for renters many with new cafes and they are all fairly close to the downtown and midtown cores.       

Toronto Residential Income Property Newsletter: November 2011

What is the key to success in the real estate investment business? One word: Patience. Many of my clients have endured a rough ride this year with the lack of too many good duplexes and triplexes. The key, quite simply, is to hang in there. I strongly recommend to my purchaser clients that you don’t get frustrated with the market and the poor returns and just stay the course. Eventually, with a lot of hard work and a little bit of luck, your property will turn up. I’ve seen it happen too many times, that just when you think you will never find the right opportunity, that there it comes right around the corner. The old saying “good things come to those who wait” can be very true indeed in the income property business.

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This month I’d like to look at a segment of the Toronto real estate market that I often don’t report on too regularly. As you know, at Plex we are very active with duplexes, triplexes and multiplexes as well as “fixer-uppers” that may have profit potential. One other area that can also have good investment potential is with mixed-use buildings – retail storefronts with two or three apartments and/or offices above.

Most of these properties are on popular retail strips like Queen, Bloor, College and obviously Yonge St. There are also little strips like the Forest Hill Village, the shops on Bayview south of Eglinton or at the top of Coxwell in Leslieville. Many neighbourhoods have retail strips that offer every good and service imaginable. Some areas are more known for specialties – for instance restaurants on the Danforth, or on College in Little Italy. Most of the time these buildings fall under the I.C.I. umbrella (commercial rather than residential) even though there may be residential rental apartments above the main floor retail space.

These properties can be quite interesting for someone looking to live-in or for the absentee investor. The market for these mixed-use buildings has been similar to strictly residential properties over the past few years insofar as lower bottom-line returns and negligible cap rates. My advice is to make sure that if you buy a mixed-use building that your main floor retail tenant is on a long lease and that their business is strong, unless of course you have a business to operate out of the main floor yourself. Most of the properties derive the bulk of their income form the main floor lease and it would be difficult to immediately make up that rent if the tenant leaves before the end of their rental term. It is much easier to find a residential tenant than a commercial one. The commercial rental market has softened a little following the recession we just endured. It is not uncommon to see more and more unrented storefronts these days.

Remember too that every new tenant is going to want to build to suit, so that cost is likely going to cost you months of free rent. It is usually the tenant who pays for major modifications to the premises, but you have to be aware of how these changes may affect the value of your building if they suddenly disappear. Also, most of these properties are on busy main streets, so keep that in mind if you intend to live in a property above a store front.

My clients have asked where the mixed-use retail market is going since commercial borrowing rates continue to be very favourable. So far in 2011, the market for these buildings has been strong and the bottom line cap rates are similar to the residential plexes. In other words, they don’t really offer any more investment benefit than apartments in traditional homes.

Experts believe that REITs (real estate investment trusts) are great indicators of where the commercial market is going. A couple of years ago many thought that the overall commercial prices would start to drop, yet that didn’t really happen in Toronto’s core. This is quite interesting because there is no indication that this is happening yet on either the residential or commercial side.

So does that mean that a storefront with two units above it will be a better buy this year than a regular triplex? Quite often I will highlight duplexes or triplexes that trade for over-asking and comment on how the investment value gets thrown out the window.

I’d like to look at some of this year’s activity that may shed light on what’s happening with these kinds of properties:

Here are all the 2011 sales in C01 west of Yonge Street south of Bloor, specifically categorized as stores with apartments or offices above. These include shops on Bathurst, Ossington, Dundas West, Queen West, College St and others.

Field	Count	Mean (Average)	Median	Mode	Low	High
List Price	11	$1,117,173	$999,000	n / a	$439,000	$2,250,000
Original Price	11	$1,120,809	$999,000	n / a	$439,000	$2,250,000
Sold Price	11	$1,080,000	$975,000	n / a	$400,000	$2,130,000
% List	11	96.36	98	98	88	103
Taxes	10	$10,743	$10,156	n / a	2779.2	$22,934.97
Bedrooms	0	n / a	n / a	n / a	n / a	n / a
Washrooms	4	4	4	n / a	2	6
Days On Market	11	93	44	44	13	472

Note that there were only eleven YTD sales in this, the most popular downtown retail area. The largest sale (over $2M) causes the average price to go into the million dollar range. Most sales are in the $700K range but they tend to be further west towards Dufferin. Obviously to closer to Yonge, the more expensive the buildings become.

Here’s the same analysis for mixed-use buildings on the east side of the DVP. These would include sales on the Danforth, Broadview, Gerrard, Pape, Coxwell St. Clair East & many on Queen Street East.

Field	Count	Mean (Average)	Median	Mode	Low	High
List Price	30	$632,010	$558,500	n / a	$289,000	$1,690,000
Original Price	30	$635,177	$568,500	n / a	$289,000	$1,690,000
Sold Price	27	$585,333	$539,000	$825,000	$329,000	$1,590,000
% List	27	98.07	97	97	81	181
Taxes	28	$9,399	$8,397	n / a	$2,358.62	$29,245.12
Bedrooms	0	n / a	n / a	n / a	n / a	n / a
Washrooms	16	3.3	3	3	2	7
Days On Market	30	65	52.5	9	3	24

The average sales prices are lower than on the west side. The highest sales here are Queen St in the Beach and prime larger buildings on the Danforth. The average for a small building with one apartment above seems to around $600K.

I think that the bottom line is if a mixed-use building is throwing off better numbers than a completely residential multiplex and has good lease(s) in place, then it should be considered seriously. I prefer all residential just from a rentability point of view but remember that investment real estate is all about the returns. If cap rates start to get noticeably stronger on mixed-use buildings, I will start steering more of my clients in that direction. It hasn’t happened yet, but as I pointed out earlier, it may.

Toronto Income Property Newsletter: October 2011

The fall real estate market is underway and now in full swing.  I have been quite disappointed with the income property inventory over the past few weeks.  Usually after Labour Day the number of listings increases from the previous summer months.  While there have been more listings as expected, unfortunately very few of them have been income generating.  I have seen only a handful of quality triplexes and in all cases the prices were too high to justify any sort of prudent fiscal return.  Since I have an on-going demand for these kinds of properties, I fear that when a good one turns up there are going to be a lot of people trying to buy it.  This will mean multiple offers on any investment property that even comes close to making sense.  This will continue to drive cap rates and investment values down.  I think the secret to success will be to stay on top of the market and to strike fast with any plexes that aren’t holding back offers.

Enjoy the turning of the leaves and to all my clients and friends out there, I’d like to wish you and your family a very Happy Thanksgiving.

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One of our mayor’s campaign promises was to get rid of the second land transfer tax that we have to pay in Toronto.  For those of you who don’t know, we have to pay an additional land transfer tax to the city as well as the province.  This adds thousands of dollars to the cost of your real estate purchase.  The Toronto Land Transfer Tax costs the average Toronto home buyer about $6,000, up front. When added to the provincial version of this tax, average Toronto home buyers face over $12,000 in land transfer taxes. We are the only city in North America to suffer this cash grab.

The Toronto Real Estate Board is calling for the mayor to rescind this very unfair tax.  Unfortunately, this additional revenue to the city is now very much needed in light of all the cutbacks that are being contemplated by City Council.

“The time has come for City Council to make the tough decisions so that City Hall lives within its means. City Hall can’t continue to saddle future generations with insurmountable debt and unfair taxes, like the Toronto Land Transfer Tax. The status quo is not an option,” said Richard Silver, President of the Toronto Real Estate Board.

Toronto real estate agents will be making a deputation to the City’s Executive Committee and have been rallying the public, through www.NoHomeBuyingTax.com, to send in their comments to City Council.  Please take a moment to visit this site and support the movement to repeal this tax.

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As anticipated by most analysts, the Bank of Canada decided to not increase the prime rate this past month. It was predicted to rise in September as recently as a few months ago. However, the recent nasty economic news from almost all fronts helped convince the Bank of Canada to hold the Canada prime rate at the current level for the time being. Canadian mortgage rates have already increased slightly due to the economic outlook. RBC and other banks have recently raised variable rate mortgage rates.  Barring any unforeseen global changes (political or climatical), the interest rates will stay relatively low.  Many people believe that the current strong demand for houses has been largely fueled by low borrowing rates. Once rates start to seriously increase then the housing market may finally start to cool down.  Given the low inventory of investment properties for sale I don’t see the demand for these properties to drop much at all.

Toronto Income Property Newsletter: September 2011

As we head into the Labour Day weekend, many of us are saying good-bye to summer and are getting ready to get back into our full-time grooves. There have been very few decent duplexes or triplexes over the past month, so I look forward to the new inventory that will hit the market in the next few weeks. To all of you who have been patiently waiting with me, our time will come soon. How will the market be? Interest rates aren’t moving yet and there is talk of yet another recession in the U.S., yet our local real estate market continues to thrive. Resale condos are still strong and I am still encountering multiple offers on a regular basis. All this will make for a challenging fall season for plexes, but we’ll be out there jumping on the best ones as they come up.


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I am pleased to announce a small change to the Plex website. Up until now our “featured properties” section would list several income properties that were available for sale in and around the GTA. I would select several of the better properties that I had been through that I liked. Quite often these properties would sell very quickly so the information would become outdated very quickly. I often would update the listings every two or three weeks, but many of the best properties were hitting the market and selling in between my updates.

After feedback from many of our clients, we have changed this section to reflect duplexes and triplexes that have recently sold. Each month I will pick a handful of sales from the prior month. You will now be able to get a sense of what the income market is doing based on some of the properties I select. I think it is very important that if you are in the market for an investment property that you stay on top of what other similar properties are trading for in your desired area. It is good too for existing landlords to stay on top of the market as well.

If any of you would like more detailed income property sales statistics covering larger areas or longer time frames, please send me an email to paul@plex.ca and I will happily send you a customized report. Naturally, for all of you who aren’t getting automatic daily updates of new income property listings as they hit the market, let me know and I will make sure that you get them right away.


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With all the heavy rain that we have been getting, I have had many clients experience water in their basement. This problem can be compounded when your lower level is tenanted. Water can enter your basement for a number of reasons. The good news is that you can prevent or at least reduce the chance of this happening. Water in your basement is most likely to occur when there’s been a heavy rainfall, snow is melting or we’re experiencing a spring thaw.

Causes of basement flooding include: • A leak in your home’s foundation, basement walls, or basement windows or door • Poor lot drainage • Failure of the weeping tile system (foundation drains) • Overflowing eaves troughs • Leaking/plugged downspouts • A blocked connection between your home and the main sewer in the street • A back-up of wastewater in the sewer system (or a combination of wastewater and rainwater from the sanitary or combined sewer system) • Failure of a sump pump (in some areas) used to pump weeping tile water

There are three types of sewers in Toronto. The sanitary sewer, which carries wastewater (sewage), is connected to your home’s plumbing (toilets, sinks, laundry, etc.) and leads to a sewage treatment plant. The storm sewer collects stormwater from catch basins (street drains), eaves troughs, weeping tiles (in many areas of the city) and carries these flows into nearby streams or Lake Ontario. In older parts of the city, stormwater and sewage are collected in the same pipe known as a combined sewer. During normal weather conditions, all the wastewater in the combined sewer is treated at the sewage treatment plant. However, in a heavy rainfall or spring thaw, the combined volume of stormwater and sewage may exceed the treatment plant’s capacity and some of the water may overflow untreated into a watercourse or the lake. Basement flooding may occur when the local sanitary or combined sewer receives more flow than it can carry. The overloaded sewer forces wastewater back through the sewer pipes where it will escape through floor drains or other low-lying plumbing fixtures in the basement.

The City of Toronto has taken steps to stop the overloading of the sewers and basement flooding. Action taken includes: • A new by-law requiring homeowners to disconnect their home’s downspout from the City’s sewer system, where feasible. • Basement Flooding Protection Subsidy Program— offered to help homeowners with costs to implement flood prevention measures or install devices (such as sump pumps and back-water valves). • Work underway across the City to make improvements to local sewer systems and overland drainage. • Regular inspection, cleaning and maintenance of the City’s sewer system. • Water efficiency programs to reduce wastewater volumes. There are some simple steps you can take to reduce the likelihood of basement flooding. If the problem is persistent, further solutions are available. • Check for and fix leaks in walls, floors, windows and foundations. • Clear overflowing eaves troughs and downspouts of leaves and other debris preventing proper drainage. • Disconnect your downspouts from the sewer system • Make sure your disconnected downspouts are draining properly, ideally 1.8 meters (six feet) from your basement walls. • Be sure the grading around your home drains water away from all exterior walls and does not impact neighbouring properties. • Have a plumber/drain specialist inspect your home’s flood-proofing devices, such as back-water values, sump pumps, floor drains or caps, to ensure they’re working properly. • Consider soft-surface landscaping that allows stormwater to soak into the ground rather than run directly into the local sewer systems (i.e. increased sodded areas, porous pavement). • Be sure your flood insurance is up to date. • Do not block the sewer connection by pouring grease down the drain or flushing objects down the toilet. • Repair/replace damaged weeping tile systems.

In my experience, exterior damp proofing is the only long-term effective remedy for water penetration problems. There are temporary internal solutions but be weary of these quick fixes. It is always best to deal with the problem at its source and implement a permanent solution to draw water away from your perimeter walls.

Toronto Income Property Newsletter - August 2011

Wow – it has been hot! This past month of July saw some really scorchers. I’m not so sure which is worse – showing income properties in the dead of winter or dealing with this 30+ degree heat. For all of you that find yourself working outside this summer, please take precautions. There have been a number of heat advisories so far, and I expect that there will be more to come. It’s all part of these ever-changing weather patterns. Just please do your best to keep yourself as cool as possible.

One of the areas that we are most active in is owner-occupied income properties. Many of our clients realize that it makes sense to rent out a portion of their homes to help pay down their mortgage. That’s why duplexes, triplexes and even houses with basement apartments are always popular. When we search for these types of properties, there are two things that I focus on. The first (and most important in my opinion) is the comfort of the owner’s suite. The amount of money that is generated from the other units (and the overall fiscal attractiveness of the property) comes second. If you are living in a suite that doesn’t suit you then it doesn’t really matter how much money you are saving. It is important that an owner’s suite have all the minimum features that make you happy to live in that unit. If you need two or three bedrooms, parking, ensuite laundry etc. and these are things that you absolutely can’t do without, then you shouldn’t sacrifice them. There are many beautiful suites in some of the income properties that I have come across. In some cases some suites in higher-end income properties are like opulent hotel rooms. Some offer more living space than complete homes. I often get asked where you find these “over-the-top” buildings in Toronto with great rental units.

From a rental property perspective, a property close to the subway line, restaurants and shopping tend to be more desirable to both to owners and renters. Other factors that high-end renters tend to look for are proximity to the more prestigious schools, sports clubs, etc. Properties close to the middle of the city – Yonge Street from Bloor Street all the way up to York Mills – get the highest rents. Other areas like the Beaches, Riverdale or High Park that have strong locational benefits are also very attractive to renters who are looking to pay a little more.

Where are the nicest income properties in town? Almost every exclusive neighbourhood in Toronto has duplexes and multiplexes mixed amongst the single-family homes. There is always activity in the high end income property market. You may not think about spending over a million dollars in Rosedale or Forest Hill but there are many homes in these areas that have fantastic rental suites in them. Key streets include Madison, Lowther, and Admiral in the Annex and streets like Maple & South in Rosedale. Sometimes suites can rent for as high as $5000 a month in these properties. That may seem like a ridiculous amount of money to pay on rent, but believe me, there is a market for these kinds of rentals.

Here are the neighbourhoods that are generally considered to be the most exclusive areas of our city and often generate the higher rents:

C01 – includes the Lower Annex, College Street, Chinatown & the downtown core
C02 – includes Upper Annex, Yorkville, Rathnelly & Deer Park (Yonge & St. Clair)
C03 – includes Chaplin Estates & Forest Hill
C04 – includes Cedarvale, Allenby, & Lytton Park
C09 – includes Moore Park & Rosedale
C10 – Includes Lawrence Park, Leaside & Midtown (Yonge & Eglinton)
E01 – Includes Riverdale & Leslieville
E02 – Includes The Beaches
E03 – Includes Playter Estates & Danforth Village
W01 – Includes High Park, Bloor West Village & The Kingsway

Market statistics show us that live-in owners and investors are comfortable paying big dollars for upper-end investment properties. Since most of them will not yield a strong cash-on-cash return, I’m sure they’re being bought based on location and the hope of eventual capital appreciation. Cap rates don’t generally apply as much to high end rental properties.

One other area that we haven’t included in the above districts is prime Cabbagetown which occupies a small portion of C08. There have been some very nice duplexes and triplexes that have sold, particularly east of Parliament close to the Riverdale Farm. It seems like this section of town is beginning to closely mirror Riverdale on the east side of the valley.

One final note: I mentioned about the rental guidelines increase last month and the news just came down Friday that the allowable increase each year for landlords to charge their tenants will in fact be 3.1%. That is quite a jump from where it is presently so it seems like landlords with a lot of suites will be able to hedge somewhat against increased

Toronto Income Property Newsletter: July 2011

Happy Canada Day everybody. July 1st marks our full jump into summer and the start of the second half of the year. We certainly saw a very strong market for income properties over the past six months. If you haven’t purchased your property yet this year, it will be trickier over the next couple of months. The inventory for quality duplexes and triplexes continues to be scarce. I expect a good fall market though with plenty of new product, provided that rates stay relatively low.

Rental Increase Guideline to Quadruple?

The maximum allowable increase that you are permitted to charge your tenants for this year is 0.7%. That’s seven bucks if you are letting your suite for $1000 a month. This number fluctuates from year to year and can obviously make a big difference to institutional landlords with thousands of units.

I read an article this morning that the Ontario Federation of Rental Housing providers are expecting this to increase to 3.1% in 2012. They cite HST as an increased cost as well as increasing inflation. Landlords also claim that their costs have risen as high as 7% and they can only charge a small fraction back to the tenants.

Whilst an official announcement hasn’t been made yet, I can’t see the increase jumping that high. I usually deal with landlords that have only a few suites, and I usually advice them to skip the rental increase altogether as a nice gesture to good tenants. If the increase goes up to 3%, and you own a few suites that could be upwards of an extra $100 a month. Let’s see what happens.

I believe in the old saying: “There are no such things as bad tenants - only bad landlords.” If you treat your tenants really well, it will pay back in less hassle throughout your journey as a landlord. I know hundreds of landlords in town from my years of selling plexes and can happily state that most of them have had very little problems with their tenants. I think that is because most of my clients understand how to treat their tenants properly.

Rental Transactions up 18 Per Cent

The recently released TREB Rental Market Report stated that there were 5079 lease transactions for condos and townhomes for the January to April 2011 period. This result was up 18% from 4319 lease transactions reported during the same time period in 2010. The number of rental units listed on Toronto MLS rose 10% to 9374 units. The increase in listings reflects the high level of condominium completions over the past year. Many investors chose to lease their units upon completion.

Bear in mind that these numbers do not reflect the rental figures for duplexes, triplexes or multiplexes in the GTA. More importantly they don’t cover the many more transactions that take place on Craigslists, Kijiji and viewit.ca. This does provide some valuable insight into rental trends however. The report stated that a one bedroom apartment rented for an average of $1485 per month. While this may be true for condos, the average price would be more like $1000 - $1200 in most self-contained units in houses. The rental market remains strong across the board so investing in good income-generating properties continues to make a lot of fiscal sense.

Toronto Income Property Newsletter - June 2011

As we head into June we can hopefully look forward to some nicer weather and a little less of the rain we’ve been experiencing. The housing market often slows down a touch at this time of year and then comes charging back after Labour Day.

I’d like to wish the best of luck to the Vancouver Canucks in the Cup finals (I know some die-hard Leaf fans cringe at the thought of cheering for the Canucks) and also a shout out to all the dads out there for Father’s Day.

The following is an article that I wrote a couple of years ago when the market was exceptionally hot and cap rates and investment value were hardly considered when purchasing a duplex or triplex. Since that time we have gone through some ups and downs but the income property market has remained consistently strong. I want to ask the same question that I posed back in 2009. Given the accepted lower rates of returns, does it still make sense to invest in income properties in the Central Toronto core?

As many of you know, I spend most of my days tripping around town with investors looking to buy quality duplexes and triplexes. Yet over the past couple of years the anticipated rates of return have dropped significantly. Is the small-scale real estate investment market dead in Toronto? In these days of properties being sold at 4 or 5 caps, one has to wonder what the motivation is to pay these kinds of prices. If you are going to buy a triplex in Toronto for investment, what kind of reasonable yearly return should you expect? If your ROI is under 5%, does it really make sense to assume the business risk? Properties require hands-on management, have frequent maintenance issues and are often difficult to dispose of quickly. In that sense, real estate is not a very liquid investment relative to stock or other paper-based vehicles. REITs often offer similar returns with a lot less hassle than owning a building. They also can be cashed in quickly if need be. It always makes sense to live in your income property when possible, but does it make sense to become an absentee landlord in today’s market?

At Plex Realty, we pride ourselves on staying on top of this market and knowing when are the right times to get in and get out. It would be a very self-serving statement to say that you should always buy income properties because that’s our stock and trade. But is this true? If returns in Toronto are lower than in the past markets and rents are stabilized, what’s the prognosis for bottom-line returns to increase? Should you buy today or wait and see what the next cycle may bring? There are two very legitimate sides to this argument. I’ll let you decide for yourself.

It can be argued that the income property market in Toronto does not provide as much as could be expected from other types of investments, such as the stock market or mutual funds. If so, is the return high enough to be worth the extra risk involved and the fact that the money may be tied up for an extended period of time? What are the local market conditions, and how are they likely to change over the course of two, five or ten years? A purchase in the Annex may be significantly different to one in Markham long-term. It is certainly easier, and in many ways safer, to rely instead on other types of investments. For instance, investing in mutual funds requires little work, is easy to understand, and historically has provided a very reasonable return. Investing in real estate presents both unique problems and opportunities. Real estate is a non-liquid, localized investment vehicle. It is immobile, of limited supply, indestructible, and physically real. It is difficult to own buildings - they require maintenance, tenants, and regular updating.

Many investors feel that it is illogical to purchase property that might have yielded a higher return five or even two years ago. From a practical standpoint, traditional measuring sticks are being redefined. If you’re looking for 10 to 12 times your gross rents to determine market value, you’re going to have a hard time finding a suitable property, at least in the central part of the city. As I said at the outset cap rates have come down. The only way to determine if they are too low is to consider alternative investment strategies and see what kinds of returns you can achieve elsewhere. Since there’s a lot of risk associated with real estate, you have to decide what minimum percentage return justifies an income property purchase.
The most successful businesspeople (not just in real estate mind you) are those who often go against the grain. They see opportunities where others see nothing. I enjoyed a biography that I saw recently on the Reichmanns. When downtown Manhattan real estate hit all time lows in the 1980s, Paul Reichmann swooped in a bought and redeveloped many key locations that local players had passed on. A couple of years later things turn around and those purchases tripled in value. It actually paved the way for guys like Trump to start redeveloping. The point is that if everyone thinks a property is too expensive, there may be hidden opportunities.

This point ties into the other side of our argument. There is still one primary reason for investing in Toronto real estate even in a lower market --in a word, profit! Owning real estate can often lead to returns that are double those of more conservative strategies. This is based on the fact that in real estate there are actually three ways to make a return on the initial investment. There are the monthly cash-on-cash returns that we have discussed thus far. There is also the yearly reduction on your principle invested and there are the possible capital gains upon disposition. Added together, these three types of Return on Investment can add up to a significant total return--one that justifies the greater risk and involvement. This is what makes the risk and bother worth it.

Many realtors believe that the Toronto market still has room to move up in prices. Our home prices are still low compared to some other large cities in North America. They also think that rents will increase again to levels we saw a few years back. I think the condo market has bitten into the rental market for sure, but I don’t think current rent levels are going to go down. If rents are going to hold and possibly increase then over the long-term, buying an income property today in a secure location starts to make sense again.

You also have to remember that your returns get better each year. If you intend to buy a multiplex and hold it for a decade, then it won’t make too much of a difference to you if you made 5% in year one instead of 8%. If the market has improved at that time and you have renovated the property over the years, I’m sure that your investment will have paid off handsomely. Many of my clients who have owned income properties for several years are pleased with the continual passive income.

Let’s take a hypothetical situation of a multi-unit building that only returns 4 or 5% today. An investor upon seeing it decides the price is too high relative to the rents and decides to wait for something better to come along. A second investor decides to buy it and start slowly cleaning up the suites to try and make modest gains in rent. Investor #1 a year later is still waiting and has determined, if anything, that the market has actually gotten worse. He continues to wait. Meanwhile Investor #2 has been able to increase his rents a bit and going into year 3his return is starting to approach double digits. Moreover, the value of his building has increased from the capital improvements. Naturally he can’t cash in on this gain, but he will at some point. The point is that waiting isn’t always the smartest move. We only have a finite number of above-average income properties in Toronto, and they don’t come up for sale that often. If one does and the returns are marginal but it is a great building or in a great spot, one could make a case for it.

So to summarize: the reasons to buy an income property today would be capital appreciation (particularly if you renovate your property over time) and the chance of improved returns over the long term. The reasons not to buy would be that the returns are too low relative to other “safer” investments. As always I suggest that you learn and study the income property market, set reasonable investment goals, and stick to your guns. If you’d like to discuss this in more detail, please drop me a line at paul@plex.ca. As always, I’m available to discuss the income property market with you at any time.

Toronto Income Property Newsletter: May 2011

First off, I’d like to wish a Happy Mother’s Day to all our moms out there.

The Toronto income property market continues to roll along in full swing. Sales of duplexes and triplexes have been brisk, especially the properties in key areas close to the subway lines and prominent retail strips. Cap rates are still hovering in the low to mid five range and properties in many cases are still holding back offers and often selling for over the asking price. Expect this to continue throughout May and potentially into the summer months.

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With the weather getting nicer, many of us undertake spring cleaning and small renovation projects at this time of year. As a landlord you are always responsible for keeping your rental suites in a state of good repair. This is often the time to make cosmetic interior improvements (paint, replace light fixtures, etc.) and do a general clean-up of any lingering maintenance items. I personally am finally embarking on cleaning up and refinishing my basement.

A lot of times my clients ask how much kitchen and bathroom renovations may run. Obviously, there is no definitive answer as the price will vary based on the quality of the finishings and individual room components. I recently found this chart that listed many common jobs that we often need to get done, courtesy of The Ontario Contractors Database. (www.ontariocontractors.com). This is a great website by the way for general construction tips and information.


Interior Renovations
Remove old plaster & install drywall $2.50 -5.00 sq.ft.
Install drywall over exiting plaster $1.50 - 3.00 (board) sq.ft.
New Plaster $8.00 - 11..00 sq.ft.
Install drywall in an unfinished area -supply and install/no insulation $7.00 - 9.00 sq.ft. floor space/.14 sq.ft. board
Texture spray ceiling $1.00 - up sq.ft.
* New house construction- 080 sq.ft. board -board, mud/tape, labour only.
Suspended Ceiling Tile Installation $2.50 - 6.00 sq.ft.
Acoustic Ceiling Tile Installation $1.50 - 5.00 sq.ft.
Sand & Finish existing wood floors $2.00 - 4.00 sq.ft.
Wood floor installation $5.50 - 12.00 sq.ft.
Ceramic Tile - Supply & install $10.00 - up sq.ft.
Ceramic Tile - labour only $5.50 -8.00 sq.ft.
Underlay - installation only $1.50 -2.00 sq.ft.
Vinyl floor tiles - supply & install $2.00 - up sq.ft.
Vinyl sheet flooring/linoleum $6.00 - up sq.yd.
Carpet - synthetic $15.00 - up sq.yd.
Carpet - natural wool $50.00 - up sq.yd.
Carpet - underpading $5.00 - up sq.yd.
Carpet - cleaning/steam/chemical $30.00 - up per room
Windows-replacement - 1,800 sq.ft. house $10,000.00 approx.
* amount may vary depending upon the situation.
Windows - sliders, casement, awning, doublehung - installed $140.00 - up
Windows - fixed, bay, bow, round - installed $1,200.00- up
Doors - exterior, insulated,metal $750.00 - up
Doors - exterior, solid wood $850.00 - up
Doors - exterior, fibreglass $900.00 - up
Doors - exterior, double, insul., metal $1,200.00 - up
Doors - exterior, double, solid wood $1,500.00 - up
Doors - exterior, double, fibreglass $2,000.00 - up
Replace entrance door latch & lock set $150.00 - up
Install decorative glass in entrance door $500.00 - up
New Storm door $450.00 - up
Install patio doors - brick wall $2,500.00 - up
Install patio doors - wood frame wall $2000.00 - up
Replace existing patio doors $1000.00 - 2000.00
Install basic skylight $1,000.00 - up
Install venting skylight $1,500.00 - up
Fireplace - Masonry $2,500.00 - up
* Note: Ont. Building Code for new house construction may require CO detector & fresh air exchanger ($2,500.00 - up) for wood burning fireplaces-gas does not require this.
Fireplace - Zero clearance $2,000.00 - up
Fireplace - Natural Gas $2,300.00 - up
Glass fireplace doors $250.00 - up
Install Fireplace damper $250.00 - up
Chimney cleaning $200.00 - 375.00
Video Chimney inspection $250.00 - up
Video Plumbing inspection $150.00 - up
* Video inspections start at $110/hr - plumbing, chimney - whatever the case.
Interior door - hollow core, hardware incl $150.00 - up
Interior door - solid core, hardware incl. $400.00 - up
French doors $600.00 - up
Bifold doors $75.00 - up
Louvred Bifold doors $150.00 - up
Sliding closet doors $200.00 - up
Sliding mirror closet doors $350.00 - up
Kitchen renovation - full $7,000.00 - up
Kitchen Cabinets - replace $150.00 - up lin.ft.
Kitchen counter - replace $25.00 - up lin.ft.
Stove fan-venting outside $475.00 - up
Ceiling fan - installed $200.00 - up
Painting - interior - whole house $1,500.00 - up
Wallpaper - hanging $2.00 - up sq.ft.
Central vacuum system $800.00 - up
Security System - you own $600.00 - up


Remember to keep your receipts as any improvement charges are capital items and do go against your capital gains if you were to sell in the future. Also, keep a receipt for all maintenance items as they will be allowable deductions on your income statement for the year.

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The Toronto Real Estate Board reported 9,262 sales of single family homes in March 2011. This sales volume represents a 48 percent increase over the sales volume for February 2011 as well as an 11 percent decline from the record breaking sales volume reported for March 2011.

Toronto Income Property Newsletter - April 2011

It seems like the all the heated sales in the core that characterized the first quarter of 2011 are starting to slow down a touch. As the weather gets nicer, there is more and more inventory hitting the market, which will give buyers more choice and more time to make informed purchase decisions. On the income property side, most properties in prime spots that have 5.5% returns or better are stilled getting snapped up quickly. It seems like living and investing in duplexes and triplexes is still a valid option for many of the buyers out there. This month I will look at a few of the income property sales from January through March of this year to give you all a sense of what has been going on.

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The first three months of this year saw quite a few duplexes and triplexes trade for over asking price. It seemed for awhile that the list price was irrelevant. Once a property was holding back the offer date it was almost a given that the list price was just a starting point. Bids would invariably exceed the list price by a fair bit and often have no financing or inspection conditions. I was involved in several multiple offer situations, including one in the College & Dovercourt area that had twenty offers and sold for almost $200K over asking.

There were thirteen sales in the Riverdale/Danforth/Leslieville/Beach neighbourhoods that had three or more kitchens. Of these sales, five of them traded for over asking price, including a triplex in Leslieville that listed at $599K and traded for $702K. There was also a sale of a converted house into five units in the Greenwood & Danforth area that traded for $1.25M. That must be a residential price record for a house in that area.

In the downtown C01 & C02 areas (west Yonge, from St. Clair down to the lake), there were twenty-four sales of properties with three or more kitchens. The average sale price was around $650K and most of these properties got 98% of their asking price.

In midtown (C04, C09 & C10), there were only four sales with three or more kitchens in the first quarter. Two went above the asking price and the other two got very close to the list price. At the moment there are very few midtown duplexes or triplexes for sale, which is quite odd for this time of year. I suppose that’s why we Plex agents have to cover the entire Central core to find opportunities for our buyers.

Coincidentally, there were also twenty-four sales in the west districts of Roncesvalles, High Park and Bloor West Village. Like the downtown sales, quite a few went over list price and the ones that didn’t still often sold very quickly. There was a fourplex in Parkdale listed for $729K (which I admit did strike me as quite low), which ultimately sold for $871K. Even though this property needed significant renovations, the final price really wasn’t that high. Fourplexes on Avenue Road often sell over $1.1M, and the rents there are not really that much higher than what people are paying downtown. The average sale price for these properties on the west side was around $600K, so about $50K less than similar properties downtown.

I expect that these income property stats will be similar for the next few months. There isn’t a ton of quality listings at the moment, although we do expect to see more in April and May.

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I often find myself explaining Toronto’s Second Suite Bylaw to a lot of my newer clients. In the City of Toronto, it is permissible to have a second accessory apartment in your property, provided it meets certain conditions.

Some of the conditions of creating a second suite (which is perfectly legal) include:
• the suite must be self-contained with its own kitchen and bathroom;
• the house, including any additions, must be a least 5 years old;
• the square footage of the second suite must be less than the remaining unit;
• generally, homes with a second suite must have a least 2 parking spaces. In parts of the former City of Toronto - R2, R3 and R4 districts - these suites are exempt and only require 1 parking space;
• any new second suites must comply with the Ontario Building Code and need building permits. Existing suites must comply with the Fire Code and zoning/property standards.

For more information, please go to: www.torontorealestateboard.com/consumer_info/gov_programs/suite_qa.htm

For properties that have three or more suites, we usually have to ensure that the continued use of the third suite is not a problem. If it has been pre-existing for several years and meets fire code requirements, generally there isn’t an issue. It is when you have two suites and you quietly add in a third without permits that things can go wrong. I also always recommend getting legal advice prior to doing any significant changes to the status of your property.

Toronto Income Property Newsletter - March 2011

The spring market is just around the corner. As we come into March, I can safely say that the severe income property shortage of the past few months is beginning to subside. Over the past week I have seen quite a few decent income-generating properties hit the market. There’s still a strong push on the demand side but as more properties become available, this fervent demand will lessen. Interest rates are still holding but one gets the sense that we can’t be too far away from rates starting to rise again.

When you change your clocks for daylight savings time in a couple of weeks, please don’t forget to check your smoke alarms. Also, I wish you all a Happy St. Patty’s Day.

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At Plex Realty we deal with a large cross-section of the Toronto investment community. Many of you are seasoned investors with lots of years of experience in the landlord business. We also do get a lot of inquiries from folks who are just getting into real estate. Sometimes the topics I talk about are only really relevant to one side of my audience, so this article is going to be split into two parts. First if you are looking to get into the income property market in Central Toronto I will present a series of pointers to help you out in the searching and buying process. The second part is for all you income property owners out there – I have presented a “good landlord” checklist. Most of this information I have pulled from the Plex website which I wrote some years ago. Despite market conditions, the advice is still very relevant today. .

FOR PEOPLE GETTING INTO THE INCOME PROPERTY MARKET:
If you are a first time buyer of a duplex, triplex or multi-unit apartment building in the GTA here are a few steps that you ought to follow to ensure your chances for success:

i. Define Your Investment Goals

Each time you review a listing or visit a property you should ask yourself would this property meet my fiscal objectives? Some of the specific factors that you should consider are: suitability of neighbourhood for renters, the current vacancy rate, economic conditions and your own propensity to stick it out with the property long-term.

ii. Identify Your Needs & Desires

Determine what you’d like to have versus what you must have. These include obvious items like location, type of investment property and whether you have a penchant for doing renovations if necessary.

iii. Know Your Financial Readiness

The financial questions that you have to ask yourself before you get started include:
• How much money can you afford to put towards a deposit on your income property?
• How much of a debt obligation you are prepared to undertake? What is the maximum that you will be able to borrow?
• What is your net monthly payment comfort level? Set a maximum dollar amount and do not exceed this threshold when searching for properties

iv. Establish a Relationship with a Lender

This is very important because there a myriad of financial products on the market today. The mortgage business has become one of Canada’s fastest growing segments. You can get no money down options, 40 year amortizations and there are specific programs for self-employed people that don’t show a lot income on their tax returns. I often say that how we finance a purchase is just as important as how much we pay for the property.

v. Develop a Purchase Strategy

There are many ways to proceed here. I obviously recommend using a realtor like myself for getting into income properties. My knowledge comes from countless hours in the field looking at rental properties, which I think is the best way to truly gain a proper understanding of the market. Once you have found a qualified agent to assist you, then it is important to develop a strong plan of attack. Start by having your agent search your local real estate board's listings as often as possible. There are many different ways in which income properties are listed on the Multiple Listing Service (MLS) so ensure that your agent is are being thorough in conducting searches. Look for listings with multiple kitchens and bathrooms and always check both residential and commercial listings. Challenge your agent to determine an innovative campaign to find you the right income property. If you don't find what you are looking for you may ask them to call income property owners of certain target buildings in your area - you never know when an owner may be thinking of selling. In addition, you may want to place classified ads outlining your specific investment criteria.

FOR LANDLORDS:

Once you have purchased a property and have gotten it all rented out, here a few pointers that may help your continued success with your venture.

i. State of the premises:

This may sound obvious, but under no circumstances should you let your property fall into a state of disrepair. If your tenants are paying each month, on time, then you have an obligation to keep everything in good working order. If something breaks down, fix it. Also, please try and keep up on maintenance items. Make sure the snow gets shoveled, the eaves get cleaned, the grass gets cut, etc. A tidy property is better all around for both you and your tenants.

ii. Rent Increases & the Residential Tenancies Act

You are allowed to raise your tenants rent only 0.7% for the year 2011. Keep up on your allowable limit and try and stay familiar with you rights and obligations under the tenancies Act. If are unfamiliar with this, please take a look at:
http://www.ontariotenants.ca/law/act.phtml

iii. Fire Issues

As a landlord you are obligated to ensure that your rental property meets fire code guidelines. The best way to ensure that your building is compliant is to hire a retrofit consultant who will give you a laundry list of all the things that need to be done. I recommend Paul Schuster at www.pcfirecode.com.

iv. Eliminating Expenses

Sometimes you are limited on how much rent you can get away with, so the best way to improve your profitability is to cut on expenses. Things like separate hydro meters help but ensuring that your building isn’t wasting energy can go a long way to saving you money in the long term.

Toronto Income Property Newsletter - February 2011

I’d like to welcome Howard Esakov back to the Plex team. Howard has years of experience with all kinds of plexes, commercial buildings and “flip” properties.

Numbers for the first two weeks of January showed an 11% decrease in sales from the same time last year. There is still an overall lack of duplex and triplex inventory in the Central core. If something hits the market that is decent, it will likely sell quite quickly and may see multiple offers. In this past week, I’ve noticed quite a few listing agents starting to “hold back” their offer dates. Some people think that the days of five caps are coming to an end. That’s quite a scary thought for me as I have always espoused the financial benefits of Toronto income properties. Yet we all have to live somewhere, so it is always good to contemplate living in an income property if you can.

I'd like to wish you all a Happy Valentine’s Day. Don’t forget to give your sweetie a big hug and a kiss on the 14th.

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Last week, Federal Finance Minister Jim Flaherty announced three main changes to mortgage rules in order to combat concerns over high Canadian household debt. The maximum number of years the government will back a mortgage was lowered from 35 to 30. The upper limit that Canadians can borrow against their home equity was lowered to 85 per cent from 90 per cent. Thirdly, government insurance backing on home equity lines of credit, or HELOCs, has been removed.

The first change is likely to have the largest impact. Buyers who purchase a home with less than 20% of the value of the home are required to purchase government-backed mortgage insurance through Canada Mortgage and Housing Corporation (CMHC). Under the new rules, mortgages amortized over longer than 30 years will no longer qualify for that insurance, making it effectively impossible to get a highly leveraged mortgage of more than 30 years in Canada. Flaherty is simply lowering the amount that can be borrowed against home equity to 85% to ensure Canadians retain some equity in their homes. The final change, to remove government insurance on HELOCs, came as a result of Ottawa's concern that certain financial institutions were allowing homeowners to roll too many consumer purchases into CMHC-insured mortgages.

While Flaherty called the changes "moderate," they did not include an increase to the 5% minimum down payment Ottawa requires for a home purchase. They also stopped short of a proposal that surfaced last week which would have required 100% of condo fees to be included in the list of expenses that are measured against income when financial firms are considering a mortgage candidate. Currently, only 50% must be included.

The changes also come following recent warnings from the Bank of Canada on household debt levels. In December, Bank of Canada Governor Mark Carney cautioned Canadian households and businesses not to be lulled by current low interest rates, because repercussions from a hike could be swift. Flaherty's announcement is the second time in three years that the government has clamped down on mortgage rules.
This is why we continue to advocate buying income-generating properties as a means of lessening the costs of home ownership. When (not if) the interest rates rise, many of our buyers will be somewhat buffered by their income streams. Even if it is simply a basement apartment, any revenue that can be generated from the property you live in will be advantageous to your cash flow and overall indebtedness over the long term.

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We always recommend to our buyers to get tenant legal liability insurance for your income property purchase. There are certain occasions where a landlord may be held liable for damages in the rental suite.

To be held responsible for an injury on the premises, the landlord or property manager must have been negligent in maintaining the property, and that negligence must have caused the injury. All of the following must be proven for a landlord to be held liable:

• It was the landlord's responsibility to maintain the portion of premises that caused the accident.
• The landlord failed to take reasonable steps to avert the accident.
• Fixing the problem (or at least giving adequate warnings) would not have been unreasonably expensive or difficult.
• A serious injury was the probable consequence of not fixing the problem (the accident was foreseeable).
• The landlord's failure -- his negligence -- caused the tenant's accident.
• The tenant was genuinely hurt.

For example, if a tenant (or one of their guests) falls and breaks his ankle on a broken front door step, the landlord will be liable if the tenant can show all of the following:

• It was the landlord's responsibility to maintain the steps (this would usually be the case, because the steps are part of the common area, which is the landlord's responsibility).
• The landlord failed to take reasonable measures to maintain the steps (for days or weeks, not if it had only been broken for minutes).
• A repair would have been easy or inexpensive (fixing a broken step is a minor job).
• The probable result of a broken step is a serious injury, and it was foreseeable (falling on a broken step is highly likely).
• The broken step caused the injury (the tenant must be able to prove that he fell on the step and that the step is where he broke his ankle).
• The tenant is really hurt (the tenant isn't faking it).

A tenant can file a personal injury lawsuit or claim against the landlord's insurance company for medical bills, lost earnings, pain and other physical suffering, permanent physical disability and disfigurement, and emotional distress. A tenant can also sue for damage to personal property, such as a stereo or car, that results from faulty maintenance or unsafe conditions. This is why having tenant insurance for these potential scenarios is a must have.

Toronto Income Property Newsletter - January 2011

Happy New Year! I’d like to wish everyone a very safe and prosperous 2011. May you realize all your goals and dreams in this year ahead. I’d also like to thank my existing buyer clients for their patience over the past few months. Many of you suffered through a pretty dry spate of inventory last fall. Let’s hope with the turning of the calendar, more quality income properties hit the market and we get you all sorted out soon. Lastly, I’d like to remind all of you that I am available 24/7 to help you or any of your associates with any of your real estate needs. Please feel free to call or e-mail me anytime.

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It has never been a better time to be a landlord in Toronto.

A recent report released by CMHC reports that the vacancy rate in Toronto has dropped to 2.1%, almost a full point down from the previous year. Some believe that in the downtown core the vacancy rate is in fact even lower. This means that almost 98% of the available apartments are rented. When the housing market starts to slow a little, potential purchasers often turn into renters.

This statistic covers the entire GTA and primarily focuses on rental apartment buildings. If you consider how many rental apartment buildings there are in the suburbs, one would expect that there are even fewer available suites in higher-end downtown multiplexes.

We are in the business of renting out apartments in duplexes, triplexes, multiplexes as well as
detached/semis with accessory apartments. This segment of the market is lumped in with everything else so it is impossible to know how this compares to traditional apartment buildings. It is estimated that this segment may represent up to 25% of the total rental stock out there. Since many of these rentals are houses with basement apartments, we can’t really be sure how many suites are really out there. They do separate condominium rentals and this vacancy rate is around 1.5%, so clearly nicer quality rental suites are in even higher demand.

“Secondary suites offer a valuable opportunity to create a new supply of affordable housing in both new and existing communities for seniors, students and families” states OHBA president Bob Finnegan. He also acknowledges that these secondary suites provide an important source of income for younger families and first time home buyers struggling to make mortgage payments. This is something I have been talking about for many years. If we didn’t have these available suites in duplexes and triplexes, then in fact with less stock, the vacancy rate would be even lower.

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Sales last year were much more robust in the first six months of the year. After the summer break the number of quality income properties that hit the market declined. As you can see it has become very difficult to purchase under $500K. Granted the return on lower priced properties tends to be higher, but they are just getting harder and harder to find.

Here are the statistics for income property (houses w 3 or more kitchens) sales as posted on TREB MLS:

C01 – Downtown west of Yonge to Dufferin
# of Sales: 97 Avg Price: $685000 Days on Market: 16
C02 – Annex, Hillcrest, Yorkville (north of Bloor)
# of Sales: 46 Avg Price: $694000 Days on Market: 12
C03,C04 – Chaplin Estates, Midtown (west of Yonge)
# of Sales: 42 Avg Price: $675000 Days on Market: 19½
C09,C10,C10 – Rosedale, Midtown (east of Yonge)
# of Sales: 66 Avg Price: $877900 Days on Market: 13½
W01 – Roncesvalles, High Park, Junction
# of Sales: 52 Avg Price: $620000 Days on Market: 13
E01,E02,E03 – Riverdale, Leslieville, The Beach
# of Sales: 70 Avg Price: $558200 Days on Market: 16

NOTE: I don’t count sales with only two kitchens since it is not possible to verify if the sale was a proper duplex or simply a house with a basement apartment.