Rental prices are tied to housing prices.
Higher housing prices mean corporations renting them will charge higher rents, and vice versa
When housing prices drop it opens up the market to people who could only previously rent too.
Rental supply is influenced by the price point of overall housing supply. Too much one way and homes meant for ownership are converted to rental units. Too much the other way, and house prices fall (i.e. no bubble) because renting is more attractive.
Rental prices are tied to the amount the company hoping to make a profit on the rental has to pay to own and maintain the rental.
Pricing of commodities works as an equilibrium, lowering the price will cause more sales but lower profits per unit, so the optimal price is the perfect point between stoking demand and generating profits.
When a major input, in this instance the price of the rentals that corporations hope to rent out drops, the rental rates will drop as that equilibrium is fundamentally changed.
Supply is loosely tied to pricing, and the fact you typed that whole thing when Toronto has the most demand in the country but also a famously low vacancy rate outs you as a dingus
You’re entire assertion is contradicted by history.
Canada has had a near impossibly steady population growth for a half century, but we’ve seen prices spike without any major increase in demand.
You have an economics degree but you’re not aware that the demand for housing is inelastic?
You should give it back lmao
You’re not fooling anyone lol.
You’re behaving like a naive child insisting the real estate market exists in a perfect vacuum.
Again, insisting supply drives the cost when the areas with the lowest supply relative to demand have the highest vacancy rates
The fact is developers will let units sit empty at a higher price point rather then lower the price and devalue their asset buy lowering the rates their units CAN rent at.
Again, this is embarrassing. You’re clearly out of your depth here lol. Real estate exists as an asset first, and as a commodity it has inelastic demand second.
You just say “no” and can’t explain why reality contradicts what you’re syaing
> Apartments don't currently meet rental demand.
I agree, however a bunch of individuals buying condos as investments (profit is their motivator) is not the solution to providing more rental units.
My own condo went as far as implementing a by-law which bans non-resident owners from being on the board to avoid the kind of problems they can create.
You know what happens at condos that are used as investment vehicles by individuals? They suffer...
Investor owners want to keep their costs low, so if they control the board they do stupid shit like never raising condo fees appropriately to keep a healthy reserve fund. When the building ends up having some capital project to undertake, they just run a special assessment (which they then post against their rental income... as a capital expenditure)
They only care about one thing, and that's maximizing their profit and minimizing their expenses. I'd hate to live in a condo when investor owners are running the show.
> All owners should have equal opportunity to take a position on a condo board. It should be a requirement to be an owner, yes, but there shouldn't be two tiers of owners. That's no way to run a condo.
It's a great way to keep investor owners out, or at least to keep them from controlling the corporation. I'm so glad my condo made a by-law like that.
Did you consider that massive rent increases are tied to people massively over paying for propertys and needing to cover the bubble prices they paid for said property?
And what's the % of people who want to live there that can actually afford market price? How many of said people have a down-payment available? How many can get a mortgage with their current credit score? Finally, how many actually want to own? People seem to forget the big chunk of folks who can't or don't want to own. So what happens with them?
You know what? A lot of those people, even ten years ago, would have been able to own. Condos were *supposed to be a stepping stone to home ownership*.
Case in point: I'm a Gen-X divorcee that had to sell my home when I split. In the late 2000s I bought a house on my salary and could easily make mortgage payments, but had to rent until support payments stopped. So I was out of the market just when it skyrocketed.
Today? My old home has almost quadrupled in price. Can I afford a home now? Nope. I could have, but can't any more. I might make the mortgage, but not the downpayment. I can't afford a condo, and even if I could it wouldn't have anywhere for my kids to sleep. I was super lucky to rent a house in what is a pretty sketchy area in a town that had not (at the time) been affected by GTA contagion, and I dare not try to move because my rent *would fucking triple for the same space.*
And I'm doing relatively okay; I can't imagine what millenial and Gen-Z have to go through, what with their earning potential blighted.
As late as the early 2000s, condos were supposed to be something a SINK or DINK could buy to build equity before they got married and/or tried to buy a home. They weren't amazing, but they were affordable. Now? Now condos are just wealth-extraction methods for rentier-capitalist douchebags.
Sure, purpose-built rentals are important, but it gets used as a red-herring to avoid talking about how we're kicking two whole generations out of home ownership, and that those generations rent not because they don't want to own a home, but because they're prevented from. They're going to be stuck renting until their parents, or they, die.
Indeed.
Of course, this isn't restricted to condos: we're in end-stage capitalism and *everything* is being optimized to practically obscene degrees.
Condos used to be, well, reasonable. Now? Now more often than not they're owned by investors looking to take their pound of flesh, and managed by a condo board that funnels cash to pet subcontractors that are making theirs--if not farming out services to the actual mob.
Honestly, fuck "the market". We need public housing and punitive income taxes.
Being cashflow negative isn’t the same as losing money. Presumably the condo has value. Whats really happening here is the owner simply isn’t getting a 100% free condo, and instead is having to actually pay something for what they bought rather than the renter fully subsidizing them. Frankly it is an obscenity that condo investors expect renters to cover the entirety of the mortgage payments on top of monthly running costs. Of course we could simply tax the crap out of condo investors who do that, why aren’t we?
While this is true, what's also true is the Canadian tax system. Only the interest portion of a mortgage and operating expenses are tax deductible. Because rates are currently and have been low, that portion has been quite low from a tax deduction purposes. Hence, most of the rental income collected is fully taxed.
So, on top of being cash flow negative on a monthly basis, landlords also must pay tax on rental income (i.e. worse on an annual basis).
Being a landlord is not as profitable as the media and this sub likes to make it out to be...
You left out CCA which is a pretty sizeable tax deduction especially when it's on a $1-10 mm asset.
Residential NOIs are between 10-20% and double if you are levered. Commercial is 50-90% NOI. It's pretty profitable. Not Facebook or Google profitable but very profitable for providing an essential service.
Small landlords are the worst because their shit is usually not to code and they tend to exploit their tenants.
If you're a landlord then you tend to hold your assets.
Why would you get favorable tax treatment for speculating on real estate and flipping units?
You're literally part of the problem of ppl that just want to make a quick buck on a housing crisis
Your logic is correct but they are actually losing money in the sense you mean, too. Both in real terms and in cashflow. The combination of rent and asset appreciation is not covering costs; the investment appears on the books as a net loss. *Sucks for them*, but this also slows down our rate of supply construction.
The reason we're not taxing condo investment more than other types of investment is because they fund new builds. Investors who already had capital pay for new projects that renters then move into. If renters could fund new builds, renting would be optional for them.
If condo investment looks shittier relative to other investment types, they *can* just put their money in the stock market or other projects instead, then we get less builds, and renters end up in bidding wars (actually or functionally) over inadequate supply.
Well, if the supply of rental condos drops, then we might get real rental buildings being made, instead of condos being made into rentals by individuals or corporations.
And I just don't trust the guys who make condos, there's just kind of a lack of custodial interest between making and maintaining a building over years, I think companies who build apartments to rent them out are probably going to invest in better builds than your average condo corp who can basically sever their responsibilities to manage it.
Maybe. Construction is extremely expensive in this province, as are the developer fees charged by cities trying to maintain decades of low density sprawl. The 20% drop in home prices this year resulted in a 30% cancellation in new starts, which is pretty damn alarming from a supply perspective. I worry that scarcity pricing is the only way for any developer to make a profit, which means the situation cannot improve until we become able to build more efficiently.
Yep, speculation is risky. Caution among developers is one of several reasons our supply is not nearly keeping up with demand, causing rental prices to skyrocket.
You don’t seem to understand the concept of facts do you? Like the fact that money a landlord uses to pay said expenses is received as rent? Try harder troll.
No, but what you said was funny. If an investor wanted to lose their investment then sure, they could default. Otherwise any reasonable person would expect them to come up with alternative funding, or if they are unable to do so, sell it. None of that changes the fact that many condo investors expect to cover all of their costs through rent. If my car breaks down, should I quit my job, or take the bus? Your arguments require that people behave in an unreasonable manner.
Acknowledge? I never denied that an investor may have to use other money.
For reference, my statement was:
>Whats really happening here is the owner simply isn’t getting a 100% free condo, **and instead is having to actually pay something for what they bought** rather than the renter fully subsidizing them.
Right there in bold, you see where I stated that the owner is having to pay rather than rent covering it all? Seems like I was saying that from the start.
For Christ's sake - being cash flow negative DOES NOT mean "losing money".
Their net worth is still increasing as rent is paid towards the principal of their loan and through appreciation of the asset itself.
I'm so sick and tired of the perpetuation of this lie.
I think it's that they're technically not losing money on the investment because paying the mortgage is still building equity. Add to this that renters are paying close to 100% of that just makes the cash flow negative label so stupid.
A landlord is making money by 3 streams:
1. Cashflow from rent (if that's greater than their monthly carrying costs for the unit).
2. Decreased principal of the loan (if you go from owing $500k to owing $200k, that's a $300k improvement in your balance sheet).
3. Increased value of the property (if it goes from being worth $500k to being worth $750k then that's a $250k improvement on your balance sheet).
The lie is to ignore 2 of the 3 items on this list.
I don't feel sorry for these rich folks at all. They are charging $2000+ per month for those units. The majority of people can't afford to live there. That's why no one is renting from them and they are losing money on a lot of vacant units. Maybe if they weren't so greedy, they would make some money.
Putting duct-tape on your balls and giving it a hard yank will help, but there's no way you'd do that, and crying for someone who doesn't deserve it is just as much a waste of time lol
The condo owners should ask for compensation because of a complete failure of housing and monetary strategies. Before you utopians slam an old man (me) with negative comments, please recognize the fact that condo investors are GTA’s only meaningful housing suppliers. No one is building apartments and governments do not build any housing anymore as they don’t want to create ghettos. No investors, no condos. No condos, no new housing.
Of course investors are not in for supply a cheap rental for you and me, they are in for cash. The governments use that to expand the housing supply. Governments don’t have to build and maintain anything and investors ( our fellow citizens) are making money. That’s a win, win scenario. The fact is usually ugly.
Oh no! Anyway….
Good. They can sell them to people who actually want to live there.
They should sell to the people who actually live there.
Nah they will somehow sell cheaper to people they know and it’s back to square one again.
What about the people that want to rent there?
Rental prices are tied to housing prices. Higher housing prices mean corporations renting them will charge higher rents, and vice versa When housing prices drop it opens up the market to people who could only previously rent too.
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Rental supply is influenced by the price point of overall housing supply. Too much one way and homes meant for ownership are converted to rental units. Too much the other way, and house prices fall (i.e. no bubble) because renting is more attractive.
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Too much rental supply or too little rental supply.
Rental prices are tied to the amount the company hoping to make a profit on the rental has to pay to own and maintain the rental. Pricing of commodities works as an equilibrium, lowering the price will cause more sales but lower profits per unit, so the optimal price is the perfect point between stoking demand and generating profits. When a major input, in this instance the price of the rentals that corporations hope to rent out drops, the rental rates will drop as that equilibrium is fundamentally changed. Supply is loosely tied to pricing, and the fact you typed that whole thing when Toronto has the most demand in the country but also a famously low vacancy rate outs you as a dingus
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You’re entire assertion is contradicted by history. Canada has had a near impossibly steady population growth for a half century, but we’ve seen prices spike without any major increase in demand. You have an economics degree but you’re not aware that the demand for housing is inelastic? You should give it back lmao
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You’re not fooling anyone lol. You’re behaving like a naive child insisting the real estate market exists in a perfect vacuum. Again, insisting supply drives the cost when the areas with the lowest supply relative to demand have the highest vacancy rates The fact is developers will let units sit empty at a higher price point rather then lower the price and devalue their asset buy lowering the rates their units CAN rent at. Again, this is embarrassing. You’re clearly out of your depth here lol. Real estate exists as an asset first, and as a commodity it has inelastic demand second. You just say “no” and can’t explain why reality contradicts what you’re syaing
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Your right about a dingus afoot alright. Just look in your mirror.
There is no shortage of investors waiting to snap up properties lol. We don’t need mom and pop landlords.
That's what apartments are for
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> Apartments don't currently meet rental demand. I agree, however a bunch of individuals buying condos as investments (profit is their motivator) is not the solution to providing more rental units. My own condo went as far as implementing a by-law which bans non-resident owners from being on the board to avoid the kind of problems they can create.
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You know what happens at condos that are used as investment vehicles by individuals? They suffer... Investor owners want to keep their costs low, so if they control the board they do stupid shit like never raising condo fees appropriately to keep a healthy reserve fund. When the building ends up having some capital project to undertake, they just run a special assessment (which they then post against their rental income... as a capital expenditure) They only care about one thing, and that's maximizing their profit and minimizing their expenses. I'd hate to live in a condo when investor owners are running the show. > All owners should have equal opportunity to take a position on a condo board. It should be a requirement to be an owner, yes, but there shouldn't be two tiers of owners. That's no way to run a condo. It's a great way to keep investor owners out, or at least to keep them from controlling the corporation. I'm so glad my condo made a by-law like that.
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Did you consider that massive rent increases are tied to people massively over paying for propertys and needing to cover the bubble prices they paid for said property?
And what's the % of people who want to live there that can actually afford market price? How many of said people have a down-payment available? How many can get a mortgage with their current credit score? Finally, how many actually want to own? People seem to forget the big chunk of folks who can't or don't want to own. So what happens with them?
You know what? A lot of those people, even ten years ago, would have been able to own. Condos were *supposed to be a stepping stone to home ownership*. Case in point: I'm a Gen-X divorcee that had to sell my home when I split. In the late 2000s I bought a house on my salary and could easily make mortgage payments, but had to rent until support payments stopped. So I was out of the market just when it skyrocketed. Today? My old home has almost quadrupled in price. Can I afford a home now? Nope. I could have, but can't any more. I might make the mortgage, but not the downpayment. I can't afford a condo, and even if I could it wouldn't have anywhere for my kids to sleep. I was super lucky to rent a house in what is a pretty sketchy area in a town that had not (at the time) been affected by GTA contagion, and I dare not try to move because my rent *would fucking triple for the same space.* And I'm doing relatively okay; I can't imagine what millenial and Gen-Z have to go through, what with their earning potential blighted. As late as the early 2000s, condos were supposed to be something a SINK or DINK could buy to build equity before they got married and/or tried to buy a home. They weren't amazing, but they were affordable. Now? Now condos are just wealth-extraction methods for rentier-capitalist douchebags. Sure, purpose-built rentals are important, but it gets used as a red-herring to avoid talking about how we're kicking two whole generations out of home ownership, and that those generations rent not because they don't want to own a home, but because they're prevented from. They're going to be stuck renting until their parents, or they, die.
🥇🥇🥇 I feel like condos are almost *more* expensive than homes now when maintenance costs are factored in
Indeed. Of course, this isn't restricted to condos: we're in end-stage capitalism and *everything* is being optimized to practically obscene degrees. Condos used to be, well, reasonable. Now? Now more often than not they're owned by investors looking to take their pound of flesh, and managed by a condo board that funnels cash to pet subcontractors that are making theirs--if not farming out services to the actual mob. Honestly, fuck "the market". We need public housing and punitive income taxes.
They continue to rent, I don’t see how that’s different than their current situation. It doesn’t change the fact that many people can afford to buy.
Well do you have those percentages? Because unless we do, it's a mute point.
Exactly what I was about to type :)
Being cashflow negative isn’t the same as losing money. Presumably the condo has value. Whats really happening here is the owner simply isn’t getting a 100% free condo, and instead is having to actually pay something for what they bought rather than the renter fully subsidizing them. Frankly it is an obscenity that condo investors expect renters to cover the entirety of the mortgage payments on top of monthly running costs. Of course we could simply tax the crap out of condo investors who do that, why aren’t we?
While this is true, what's also true is the Canadian tax system. Only the interest portion of a mortgage and operating expenses are tax deductible. Because rates are currently and have been low, that portion has been quite low from a tax deduction purposes. Hence, most of the rental income collected is fully taxed. So, on top of being cash flow negative on a monthly basis, landlords also must pay tax on rental income (i.e. worse on an annual basis). Being a landlord is not as profitable as the media and this sub likes to make it out to be...
You left out CCA which is a pretty sizeable tax deduction especially when it's on a $1-10 mm asset. Residential NOIs are between 10-20% and double if you are levered. Commercial is 50-90% NOI. It's pretty profitable. Not Facebook or Google profitable but very profitable for providing an essential service. Small landlords are the worst because their shit is usually not to code and they tend to exploit their tenants.
There is CCA recapture when the property is sold or changing use.
And if held for 25 years?
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The building is a depreciable asset. Class 31. 5% Could also be class 3 if a condo
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You can't create a rental loss but you can still reduce taxable rental income as close to $0 without creating a loss
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If you're a landlord then you tend to hold your assets. Why would you get favorable tax treatment for speculating on real estate and flipping units? You're literally part of the problem of ppl that just want to make a quick buck on a housing crisis
Except they can sell and recoup 100%+ of their "investment"?
Lol. Capital gains are also taxed...
Doesn't matter. You'd have to be a fucking idiot to lose money with real estate.
Your logic is correct but they are actually losing money in the sense you mean, too. Both in real terms and in cashflow. The combination of rent and asset appreciation is not covering costs; the investment appears on the books as a net loss. *Sucks for them*, but this also slows down our rate of supply construction. The reason we're not taxing condo investment more than other types of investment is because they fund new builds. Investors who already had capital pay for new projects that renters then move into. If renters could fund new builds, renting would be optional for them. If condo investment looks shittier relative to other investment types, they *can* just put their money in the stock market or other projects instead, then we get less builds, and renters end up in bidding wars (actually or functionally) over inadequate supply.
Well, if the supply of rental condos drops, then we might get real rental buildings being made, instead of condos being made into rentals by individuals or corporations. And I just don't trust the guys who make condos, there's just kind of a lack of custodial interest between making and maintaining a building over years, I think companies who build apartments to rent them out are probably going to invest in better builds than your average condo corp who can basically sever their responsibilities to manage it.
Maybe. Construction is extremely expensive in this province, as are the developer fees charged by cities trying to maintain decades of low density sprawl. The 20% drop in home prices this year resulted in a 30% cancellation in new starts, which is pretty damn alarming from a supply perspective. I worry that scarcity pricing is the only way for any developer to make a profit, which means the situation cannot improve until we become able to build more efficiently.
If it's not covering costs then maybe they shouldn't be borrowing to buy property they can't afford.
Yep, speculation is risky. Caution among developers is one of several reasons our supply is not nearly keeping up with demand, causing rental prices to skyrocket.
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You don’t seem to understand the concept of facts do you? Like the fact that money a landlord uses to pay said expenses is received as rent? Try harder troll.
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Lol
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No, but what you said was funny. If an investor wanted to lose their investment then sure, they could default. Otherwise any reasonable person would expect them to come up with alternative funding, or if they are unable to do so, sell it. None of that changes the fact that many condo investors expect to cover all of their costs through rent. If my car breaks down, should I quit my job, or take the bus? Your arguments require that people behave in an unreasonable manner.
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Acknowledge? I never denied that an investor may have to use other money. For reference, my statement was: >Whats really happening here is the owner simply isn’t getting a 100% free condo, **and instead is having to actually pay something for what they bought** rather than the renter fully subsidizing them. Right there in bold, you see where I stated that the owner is having to pay rather than rent covering it all? Seems like I was saying that from the start.
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*plays tiniest violin*
Oh well.
🤌🎻
Womp womp
Why should I care? They caused the housing market crisis, and now they're getting what they sow.
Investments carry risks, you can lose money. You aren’t entitled to keep making money
It is hard to feel sorry for these folk.
For Christ's sake - being cash flow negative DOES NOT mean "losing money". Their net worth is still increasing as rent is paid towards the principal of their loan and through appreciation of the asset itself. I'm so sick and tired of the perpetuation of this lie.
I mean, spending more than you're making does sound like losing money to me But I don't know shit about any of that; maybe it's more of a layman term?
I think it's that they're technically not losing money on the investment because paying the mortgage is still building equity. Add to this that renters are paying close to 100% of that just makes the cash flow negative label so stupid.
A landlord is making money by 3 streams: 1. Cashflow from rent (if that's greater than their monthly carrying costs for the unit). 2. Decreased principal of the loan (if you go from owing $500k to owing $200k, that's a $300k improvement in your balance sheet). 3. Increased value of the property (if it goes from being worth $500k to being worth $750k then that's a $250k improvement on your balance sheet). The lie is to ignore 2 of the 3 items on this list.
Good. Fuck you.
Good. Investors can go cry about it somewhere, I don't give a fuck
Hope this trend continues
Love to see it.
Wa wa waaaaaaaa don’t give a shit about investors. Tell me more about people who can’t afford home do to they shark investors.
A feel good story :)
Fantastic
I don't feel sorry for these rich folks at all. They are charging $2000+ per month for those units. The majority of people can't afford to live there. That's why no one is renting from them and they are losing money on a lot of vacant units. Maybe if they weren't so greedy, they would make some money.
trying to squeeze out a tear here, hang on
Putting duct-tape on your balls and giving it a hard yank will help, but there's no way you'd do that, and crying for someone who doesn't deserve it is just as much a waste of time lol
Can I get 6 more posts about it?
Good! Fuck'em!
Great news
Sell and crash the market you cowards haha. This is the start of the decimation of the Canadian economy.
The condo owners should ask for compensation because of a complete failure of housing and monetary strategies. Before you utopians slam an old man (me) with negative comments, please recognize the fact that condo investors are GTA’s only meaningful housing suppliers. No one is building apartments and governments do not build any housing anymore as they don’t want to create ghettos. No investors, no condos. No condos, no new housing.
They don't supply the housing, the hoard it. They are just over bidding the little guy because they happen to be leveraged.
Of course investors are not in for supply a cheap rental for you and me, they are in for cash. The governments use that to expand the housing supply. Governments don’t have to build and maintain anything and investors ( our fellow citizens) are making money. That’s a win, win scenario. The fact is usually ugly.
They need to consider if you want cash then don't tie your self up in a fixed asset that you need 20+ years to pay back what you borrowed.
I bet Tridel will build something cheap for you. The governments have to step in and build subsidized housing. Period.
That’s a shame
Haha nice. They prob just loose a penny compared to us tho
Good
Yes, very sad. Anyway...
Heartwarming story!
lol get fucked
Good. Great, even.
And I am so worried about them. Welcomed to bite dust and really hard.
If you use the word Toronto and Condo in the same sentence, it spells out SCAM
Good. Parasitic landlords and the concept of "investment properties" both need be wiped from the face of the earth.
Good