Episode 5 My Journey – Investing in Toronto Condos – Turning $39,300 into $1 Million

May 24 / 2017

Episode 5 – The Solution To Rent Control – Buy More

Hello all. Welcome to alexjwilson.com and Episode number 5 on my journey on how I’m turning $39,300 into $1 million dollars. Today I’m going to talk about rent control. Recently we had the announcement about rent controls being implemented in Ontario.

I received a lot of questions from individuals:

“Alex, how is this going to impact your buying? What should I do?”

My response:

“This is great, buy more,”

Their response:

“This seem very counter-intuitive. Buy more? But I can’t raise my rents.”

Well, with rent controls your current rental properties are locked in at set rate. Tenants do not have any incentive in the short to medium term to move. This means they’ll stay in the property longer because if they move their rent will be higher. This means there is going to be less rental inventory because there will be less turnover of existing rentals.

What this means is that new buildings that are being completed in the future will have higher rents than what you initially projected because there will be even less supply on the market. We are eliminating a percentage of the existing rental inventory that regularly turns over. Your rental rate in the future is going to be higher on your new product. This is great news for you.

Now, your next question will be:

“But Alex when I rent out my unit then I’m in the same boat as everyone else that has existing rental inventory. I’m locked into that rate.”

This is where the buy-more scenario comes in. Yes, if you only own one rental property, you are going to be impacted by fluctuations in the market, but if you owned multiple units coming on at different time periods, you are going to earn more rental revenue across the spread of the units.

If you want one unit, yes, you’ll be locked into that one rate. What you want is five units completing in different years. Every year you’re going to be renting your units at progressively higher and higher rents because there will be less rental inventory on the market. The new rental inventory will be renting at a much higher rate because we have such a low vacancy rate in Toronto. We have less than a 1% vacancy rate currently in downtown Toronto and now we’re restricting supply even more.

If you have one unit you are susceptible to the rent control, but if you own five units that come on at different times you are going to average out a higher rent than if there were no rent controls. Eventually the tenant in the first unit is going to move out and that will be rented out at the higher market rate. You don’t want one rental unit. You want five and the five plays into our journey on how we’re turning you into a millionaire by investing in real estate.

On next week’s video, I’m going to lay out the road map for you so you can see step by step how you will get to a million dollars.

Now I wanted to talk more about the current market. I’m getting a lot of questions about what’s currently happening in the market.:

“Alex is there a slow down?”

“Are prices going to come down?”

I dug down into the April 2017 numbers to see what happened in April.

When I look at the freehold market – including detached homes, semi-detached homes, and townhouses this is what I found:

In April 2016, there were nearly 2500 new listings on the market. In April 2017, 3360 new listings came in the market.

That’s an increase of 35%.

Active listings also increased.

Active listings went from nearly 1600 in April, 2016 and to 2034 in April 2017.

That’s an increase of 28%.

What we have is an increase in the supply for the freehold housing market. That’s a good thing. We have a leveling out of the prices because supply and demand are starting to intercept. The leveling of prices has eliminated many of the multiple offer situations. It doesn’t mean prices are going down it just means prices are leveling out.

Now on the condo side:

From April 2016 to April 2017 new condo listings were flat. A 0% increase year over year.

Active listings decreased significantly.

Active listings went from nearly 4000 in April 2016 to under 2000 in April 2017. This is a decrease of 51%.

We have also seen sales increase from 1700 in April 2016 to nearly 2200 sales in April 2017 representing a 20% increase.

We’re seeing an increase in the demand and a decrease in the supply of condos. That’s why we’re seeing a jump up in the prices of condos.

Condos are still attractive from an affordability stand point. We’re seeing prices of freehold properties plateau because houses are very, very expensive. It requires a certain level of income and capital (down payment) to get into the housing market. This leaves the condo market as the alternative for people to enter into home ownership. We are now seeing a shrinking of the price gap between freehold housing and condos. We still have room to grow on the condo side. Condo prices are still going to continue to go up until supply and demand meet. That helps give you an idea of what’s going on the freehold and condo markets.

To start your journey to $1 Million dollars call/text 416-996-5181 or email contact@alexjwilson.com.

Cheers,

Alexjwilson.com #1 Agent At RE/MAX Condos Plus 2016

Alexander J. Wilson B.A.
Team Lead: Alexjwilson.com

TOP 1% Condo Sales in Toronto 2009-2016

Titan Club 2016
RE/MAX Hall of Fame

RE/MAX Life Time Achievement Award
Sales Representative
RE/MAX Condos Plus Corp. Brokerage

Email: contact@alexjwilson.com
Office: (647) 352-5181
Mobile: (416) 996-5181

Website: http://www.alexjwilson.com

If you are moving ANYWHERE in the world – contact me… I know the best agents.

 

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CONTACT ME

Alex J. Wilson, B.A., Sales Representative
Condos Plus corp., Brokerage
45 Harbour Square
Toronto, Ontario, Canada
M5J 2G4

Mobile: (416) 996-5181 Office (416) 203-6636

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