December 2019 Market Update

March Market Update

February Market Update

January Market Update

December Market Update

Investing: Buying a Rental Property

Investing: Buying a Rental Property

There are several important factors to consider when buying a property with the intention of renting it out and going to the long term gain or selling in a more favourable real estate market. At the end of the day, it’s very much a game of numbers that either work for your goals, or don’t.

Will Rental Income Cover Your Mortgage and Expenses? Positive Cash Flow …

You will likely to have a minimum 20% downpayment on a rental investment. In an ideal scenario, you would be cash flow positive when purchasing an investment rental house. Meaning that your monthly cash flow is higher than your mortgage plus expenses. For investors buying in Toronto today, it’s more common that they have a negative cash flow but are hoping for the benefits of equity and long term appreciation in value. Tenant rent can pay a portion of the mortgage and help to build equity. For long term appreciation, there may be years that the property doesn’t appreciate at all, but the goal is that over years the market will increase.


The majority of financial lenders will take into account approximately 80% of the rental income anticipated when calculating what you can afford. With this in mind, you may qualify for a larger mortgage. Some lenders will only consider rental income from properties that have legal apartments.


Incidentals: There will be a variety of expenses in addition to the monthly mortgage and standard expenses (utilities, property tax, house insurance). You have to factor in renovation and improvements; possibly a leaky roof or the need for a new furnace. These are expenses that you can not always plan for, but need to have funds available for the ‘what it’ situation.

Rental Income: Is considered taxable so taxable so it would be added to your annual income. Fortunately you can write off a lot of expenses which helps bring the profit down.

Capital Gains Tax: Is calculated when you sell your investment property. You will likely have to pay 50% of your profit to capital gains tax. This means that after you have deducted selling expenses, 50% of the profit you make will be added to your annual income and taxed at your regular income tax bracket. Clearly, it’s more important to speak with your accountant to determine your individual tax situation.

Multi-Dwelling Houses, What Happens If You Live in One of the Apartments?

Many people choose this option, especially when they need the extra rental income to afford the mortgage. It’s a creative and smart way to get into the real estate market. Living in the house makes it easier for you to be present for your tenants and quickly address any issues that may come up. There are a few financial factors to consider. One point that many people don’t realize is that if you live in less than 50% of the house then you may have to pay capital gains tax on the entire house. Keep in mind, capital gains are calculated on your profit less expenses. Also, from a financing perspective, if the property is your primary residence, it’s unlikely the bank will include rental income in your mortgage approval. That said, if you have appropriate leases in place and documentation to substantiate the income the bank may consider up to 80% of the income towards your mortgage approval. It’s worth discussing with your mortgage broker.


There are so many factors to consider when considering purchasing an investment property. Get in touch!

November Market Update


The Top 4 Investment Strategies for Toronto Real Estate

House prices in Toronto have been on the rise for many years and even with the prices adjusting after the 2017 housing plan was introduced, you still need a lot of money to purchase property. Lately, I have had many clients looking to invest their money in real estate and taking advantage of the more balanced market. There are several options that one can invest in, each offering varying complexity, risk level and ease of entry. Here are a few strategies that are most common.

1. Purchase and Hold

This strategy is simple: buy a property to rent out and hold onto it for the long term. The goal is that the tenants gradually pay off the mortgage and you gain equity in the home. In the current Toronto real estate market, unless you have a huge down payment it is unlikely the rental income will cover the mortgage in its entirety, but it is still a solid investment strategy if you can afford it. It is a very straight forward calculation and often easier to get financing. Keep in mind that a minimum of 20% down payment is required.

2. The Flip

Everyone has seen the abundance of real estate TV shows where a home that is in disrepair is purchased and the savvy real estate agent and designer renovate it, stage it and sell the home for a profit. Fun! It does look really easy but in reality it can take quite some time to find the right house for this and if you aren’t a builder yourself, it can become quite costly carrying a mortgage while doing the renovations. It can be a huge financial success if done in the right market, and with the right partners. On the financing side, it is a little trickier to get a mortgage since you won’t be able to show an income from it until it is sold. In a very hot and rising real estate market flipping houses can be very profitable.

3. Buy, Renovate & Hold

This strategy is similar to the first one, buy and hold for the long term gain. The primary difference is sometimes you can buy a property for a better value, renovate it and then rent it for a higher rent before ultimately selling when the market is more favourable. This is a great option for those who have contractor connections, designers or of course contractors often choose this investment option. This is another scenario where you may have to get creative on your financing sources unless you have a lot of money down and saved for your renovation, banks are conservative around giving out mortgages. It’s important to calculate all your expected costs and potential profit so ensure your investment goals are achieved.

4. Partnership

Lots of people prefer to share in the risk of purchasing an investment property, or don’t want to tie up all their funds buying on their own. Investment purchases with a team is a great way to get a foot in the market but also requires the right partner with the same vision and goals. In a partnership it is critical to have absolutely everything in writing before any money changes hands. You should outline not only the initial financial expectations of each party but also the details like who will manage repairs? how will you select tenants / who will manage the process?, when do you want to sell the house and on what criteria?


Get in touch, I’m happy to speak with you about your investment goals and what option may be best for you.

Happy Investing!

October Market Update

Top 10 Things to do This November in the City!

There is no shortage of fall activities to do this November, but here are a few ideas that are worth getting in your calendar. Check them out!

Royal Agricultural Winter Fair | November 2nd – 11th

Family Sundays at the Gardiner Museum | Every Sunday in November

The National Woman’s Show | November 9th – 11th

Harry Potter & the Goblet of Fire, In Concert | November 15th – 17th

The Toronto Christmas Market | November 15th – December 23rd

Santa Claus Parade 2018 | November 18th

Charlie and the Chocolate Factory | November 20th

Gourmet Food & Wine Expo | November 22nd – 25th

One of a Kind Show & Sale | November 22nd – December 1st

Calvacade of Lights | November 24th

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