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 Quite often these properties would sell very quickly so the information would become outdated very quickly.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