While Toronto’s vast real estate market is rich with investment opportunities, selection is considerably smaller for buyers who are explicitly seeking a vacant property. And, in a regulatory landscape where rent increases are restricted, many investors have concerns about lost income potential when inheriting tenants who have protected rates.
However, owning a lucrative rental property in Toronto doesn’t necessarily require finding a place that is tenant-free. In fact, purchasing a property with existing tenants offers prospective landlords a number of conveniences.
Determining whether it is most advantageous to buy a property with or without existing tenants is more complicated than many investors realize. Beyond each buyer’s unique goals, it’s a decision that requires careful analysis of the market and the property in question.
Eager to invest in Toronto’s high-opportunity market? Our strategic advisory services can ensure you accomplish your present and future real estate goals. Call us at 416.441.2888 or reach us by email at evan@christensengroup.ca.
Benefits of a Property With Existing Tenants
Immediate Returns
One of the foremost advantages of selecting a property with existing tenants is the immediacy of returns earned. Unlike purchasing a vacant property, where investors have to wait for tenants to move in, an already tenanted property is generating cash flow from day one. This uninterrupted revenue can be used promptly to help offset buying costs, mortgage payments, property taxes, insurance and other expenses associated with property ownership.
Bypassing the Tenant Screening Process
Purchasing a property with existing tenants allows investors to bypass the process of sourcing and vetting new candidates. In a city with a large pool of renters, tenant screening is often a time-consuming and stressful process. When done adequately it involves background checks, credit assessments, and reference verification, among other things.
When purchasing a tenanted property, the investor inherits existing tenants, eliminating the need to undertake this process – at least to the same extent. While buyers should still conduct due diligence on the current tenants, it’s a far less demanding process than starting from scratch.
Stability & Rental History
Another benefit of purchasing a tenanted property is the established rental history. Upon purchase, investors become privy to valuable information such as past rental rates, payment history, and tenant behaviour. This historical data can be helpful in assessing a particular property’s market performance, helping landlords make informed decisions about management and property value.
Approaching your first real estate investment? Read these blogs to help you maximize your ROI and become a successful landlord.
- Which Properties in Toronto Are Impacted by Rent Control?
- What Are West Toronto’s Best Neighbourhoods For Investors?
- Is it Possible to Take the Risk Out of Real Estate Investing?
What Are the Rules Around Eviction?
Some investors may question whether or not they can simply evict any existing tenants after inheriting a property and source new residents at a higher rental rate. In Toronto, existing tenants are protected by various regulations that limit actions available to landlords when they wish to evict.
Evicting an existing tenant requires explicit reasoning, and unfortunately, the transfer of property ownership is not considered a valid reason if the purchaser intends to use it as an investment. Therefore, if an investor buys a property with existing tenants, they must honour the terms of their lease.
Purchasing a Tenant-Free Property
Despite the beneficial nature of tenant inheritance, some investors may elect to wait for a vacant property rather than attempting to navigate or circumvent eviction regulations. While getting an empty income property up and running (and earning) requires time and labour, investors can position themselves for a smooth and lucrative venture with proper planning.
Preparing to make a real estate investment? Consider these posts from our blog for helpful guidance.
- What Investors Should Know About Toronto’s Municipal Accommodation Tax
- Investing in Retirement: 5 Real Estate Strategies for Retirees
- Converting Your Family Home into an Investment Property
Find Your Perfect Investment Property
If you’re looking to make a strategic, high-return investment in Toronto real estate, you’ll need an expert in your corner. Boasting over four decades of experience, Christensen Real Estate Group is your best resource for sourcing and securing a profitable income property. We know our local market better than anyone and have the insights and intuition to help you discover the perfect property for your portfolio.
Beyond the parameters of a traditional real estate transaction, we strive to be your long-term advisors on all things real estate. As investors and landlords ourselves, we can provide you with critical advice on tenant sourcing and communication, relevant regulations, and more to help you get off on the right foot.
Searching for a high-opportunity investment opportunity in West Toronto? Our team has decades of industry experience to support your goals. Call us at 416.441.2888 or reach us by email at evan@christensengroup.ca.
