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The Number One Secret Most Condo Investors Don’t Even Know About

There is a secret in the world of condo investing that most people have no idea about, but one that is a game-changer for those who understand what it is and how to use it for their benefit…

If you already own an investment condo in Toronto, then what I’m about to tell you could literally add significant profit to your bottom line this year.

If you don’t own any investment condos yet, or if you only have owned freehold properties in the past, this information will likely cause you to start looking at investing in condos in a totally different light.

And the best part, and why I’m writing this blog post now is that this secret is especially relevant TODAY.

Background Information

I promise I will get to exactly what the secret is in a minute, but first a little background information.

The condo market has been hot for years in Toronto. Investors have made a lot of money by simply buying units on plan, waiting 3-4 years for them to be built, then flipping them for a profit. Prices have risen at an average of about 8% per year downtown for the last several years.

At the same time, the rental market for condos has been very strong too. Investors who own downtown units close to transit lines have never had a problem renting out their units. The vacancy rate for condos has consistently been very close to zero and rental prices have been slowly climbing.

Market Shift

So the condo market has been great. Over the last year however, there has been a pretty significant shift in the market.

Sales of condos (both new and resale) have slowed down to the tune of 20-30% less than they were a year ago. But at the same time, the rental market is actually hotter than ever!  The number of condos rented downtown in September for example was up 33% compared to last year.

Sales are down, but rentals are up. It seems that a huge chunk of the market that was planning on buying a condo this year, has decided to hold off and rent for another year instead (the new mortgage rules played a part in this). The result is that there has been tremendous upward pressure on rental prices. In many buildings the average unit has gone up in price as much as 10-15% over the last year.

The Secret

Ok enough background information, want to know what the secret is?


Condominiums that were built after 1998 in Ontario are NOT subject to rent controls.


In plain language, this is what it means: if you are an investor who owns a condo that was built after 1998, once your initial 12-month lease period with your tenant has expired, and you have a tenant who is renting from you month-to-month, you are not limited to increasing the rent by the amount permitted by the Ministry of Municipal Affairs rental increase guidelines (3.1% for 2012). You can increase the rent by any amount you wish. It could be $50/month or $500/month or $5000/month.

Wow. Let that sink in for a minute. There is no limit to the increase you can ask for on your investment condo.

This is not a new rule, it has been in effect for years but as I said, most landlords don’t know about it. Certainly most real estate agents don’t know about it.

So, why is this particularly relevant today?

Because there are probably hundreds of landlords out there right now who are renting out their condos for below market value. As I said, rental prices in many buildings have increased significantly in the past year and many landlords are either unaware of this, or they are unaware that they can legally do something to take advantage of the increase in the rental market.




1. Call your real estate agent right now.

Get on the phone and call your agent. Tell them you just read this blog post. If you don’t have an agent, contact me.

2. Figure out the current market rate.

Do your homework and analysis with your agent to determine what you should be charging for your unit. You might be surprised. If you are getting market value, then great. Sleep easy at night. If you determine that rates have gone up for your type of unit, then

3. Fill out the N2 form

You must fill out the proper paperwork and submit it in writing with 90 days notice to your tenant before any increase can be made. Here is the link to the N2 form required to provide notice of a rental increase. Remember, you can only do this if your lease agreement has expired! It cannot be done midway through a lease.

4. Be prepared to lose your current tenant.

Just because you can increase your rent, doesn’t mean your tenant will accept it. They might just move out if the increase is too burdensome. So be prepared for this outcome and understand you might have to hit the pavement and find a new tenant. If you are not happy with your current tenant, this could also be used as a way to get vacant possession of the unit for finding a new tenant or putting it up for sale. If you have a high quality tenant that you are happy with, you will want to think carefully before raising the rent on them.

 5. Post your results in the comments section below.

I’d love to hear how this information helped make you money! Or feel leave a question in the comments section as well.

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12 Responses to “The Number One Secret Most Condo Investors Don’t Even Know…”

  1. Ray

    Great post Andrew! The 8% increase of maintenance fee ( as a result of HST) and also the recent property assessment notice from MPAC are all supporting the need for the hike of rental fee of condos. My recent assessment notice indicated a phase-in increase of 8.6% for 2013 property tax. It will then increase by 5.6% for the next 3 years after that.
    What other options landlords have to keep their cash flow positive?

  2. Andrew la Fleur

    Another tip is check your mortgage rate. Rates have come down if you are paying more than about 1% above current rates call your mortgage broker and ask about refinancing/breaking your mortgage.

  3. Andrew la Fleur

    I should add that just because your assessment went up doesn’t mean your taxes necessarily will. City council has to approve any increase in taxes before they go into effect. Rest assured, your taxes will continue to go up! It’s just not automatic.

  4. Ray

    Thanks Andrew! If I understand correctly, since the assessment is gone up by about 8.6% for 2013 and I used to pay about 1% of the property value as a property tax, now that 1% will be lower (based on your reply)?

  5. Brian Prashad

    Good post but you have to give investors the full picture. Sure, they can raise rents to whatever they want but if this results in vacancy for even a month they have to calculate if the increase more than offsets the amount of mortgage interest, taxes and condo fees during the vacancy. Investors should also factor their income tax into the equation but this will obviously vary depending on the indivdual investors income tax strategy. In other words an extra $500 in rent is not necessarily an extra $500 when all factors are considered.

    Then we also have to consider supply and demand. Raising rent is relevant right now but as you know there is a ton of supply due to hit the market in the very near future. Most are expecting this new supply to have a stabilizing effect on rent prices. Basic economic principles, not the rent increase guidelines, will pretty much determine rents over the next couple years.

    The final issue is one that only a seasoned landlord can tell you about due to years of experience. Sometimes it’s not always best to charge the maximum rent the market will allow. I think any seasoned landlord would gladly sacrifice a few extra dollars in cash flow to get a AAA++ long term tenant (if they are in it for the long term). In my experience those who are willing to pay the highest possible rents (or higher) are usually trying to use money to shore up weaker parts of their application. What I’m saying is an investor needs to consider the entire tenant’s application not just the rental price.

  6. Andrew la Fleur

    Yep. good points Brian. That’s why I said if you try a strategy like this you need to be prepared to lose your tenant, and if you have a good tenant, it might not be worth it. Investors should weigh the pros and cons.

  7. Read your post on a mobile phone I may have missed the part you wrote about potentially losing a good tenant. Keep up the good work bro!

  8. Tom Lebour

    Hello Andrew, Question: condo built in the late 1970’s and the current tenant is moving out at the end of the term?

    Can the landlord NOW ask as much as 10% above the current rent when advertising for a new tenant ?

    The 2.5 % rent control for 2013 doesn’t apply right ? Thanks in advance

  9. Andrew la Fleur

    if it is a new tenant, then the landlord has no restrictions on what they can ask for rent.

  10. Chris

    Hi Andrew,
    I just found your article after searching online. I saw the article in today’s TheStar ( and I was wondering about the date in question. You stated condos built after 1998 in Ontario are not subject to rent controls but in the newspaper article in TheStar they quote this date to be November 1, 1991. Can you please clarify which date is correct and what source you are using if you are correct with 1998? Is there a month for 1998 if you are right?
    Thank you in advance

  11. Nick

    Hi Andrew,
    Multi-res building….built before 1980. Current tenant occupied one apartment post 1998. Does the rent control still apply? This tenant is paying significantly lower than market value. Another tenant same building in equal apartment is paying twice the rent price.

  12. Andrew la Fleur

    The date is 1991 but there are some exceptions taking it up to 1998 so to be safe I said 1998.

    built before 1991 then rent controls should apply

    more info here:

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