Inside a Toronto real estate show where investors are on the hunt

Tahmeed Shafiq, The Breach:
So, how have your tenants responded when you’ve raised rents like that?
Fairly positively. They know what’s going on. They know what the alternative is.

Shafiq:
What’s the alternative?

Investor:
Good luck trying to find a rental. It’s a nightmare out there.

Shafiq:
We’re here in downtown Toronto, smack in the middle of Canada’s affordability/housing crisis, for the Canada International Property Show. Housing developers, investors and property managers are all here to celebrate their winnings, and we’re here to ask them about it.

There is something a little ironic about having a conference catering to the wealthiest per cent of Canadians in a public library open to all.

Investor:
The rents have been going up quite steadily. Properties that were renting out in Mississauga [for] $2,500, $2,400 are now $3,500 to $3,600. Basements are going for $1,600 to $1,700 a month.

Shafiq:
Are the landlords you work with generally happy with that rise in rent, or would they like to increase it even further?

Investor:
They would like to increase even further, because I have clients that were paying, let’s say $1,700 to $1,800 in mortgage, now they’re up to like $3,000, and no tenant is leaving, unless they’re moving out of the country. Like they’re not moving houses, they’re not moving condos. Nobody wants to go anywhere.

Shafiq:
Because there’s nowhere else to go.

Investor:
Unless they move from, like, Mississauga to, let’s say, Niagara, they’re gonna price themselves out.

Shafiq:
If the landlord decides to sell the property, they would have to find somewhere else, but nowhere right now is seeming affordable for tenants. So it really feels like tenants are—

Investor:
—Not in the immediate neighborhoods. Nowhere close by, not even the same city. It’s just the unfortunate truth. But that’s how it is.

Aspiring investor:
I’m a student and I’m looking forward to buying a building one day.

Shafiq:
So you want to be an investor at some point?

Aspiring investor:
At some point, yeah.

Shafiq:
How do you feel about the cost of housing?

Aspiring investor:
Yeah, so I’m actually 20 years old, and I think when my parents were buying properties and, like, starting to start their careers, it was a lot easier for them.

Shafiq:
Yeah.

Aspiring investor:
Yeah, there’s just a lot more barriers that, like, this generation and those that are coming up are going to have to face.

Shafiq:
Do you rent right now? Or do you live at home?

Aspiring investor:
I do rent. Yeah. It almost took me a year to find a place to live for school. I’m at U of T. I’m studying there. Took a lot. And the market’s all jacked up.

Shafiq:
What do you think Canadian investors are looking for when they talk to international developers here?

Investor:
I think there’s a lot of frustration in Canada, in general.

Shafiq:
From investors?

Investor:
From investors, just politically, economically, taxation wise. So I feel like that is kind of catching on with people saying, “Hey, you know what, maybe there’s life outside of Canada. Let me look into Costa Rica. Let me look into Mexico. Let me look into Dubai.”

For what we’re doing here, we’re here just talking about Calgary. We’re seeing a tremendous response of people saying, even though they’re in Toronto, they’re like, “Let me go to Calgary. Taxes are half as much, properties are half as much. Rents are way less.” People are fed up, and they’re looking for places outside of Canada, especially outside of Toronto.

The Bahamas investment attaché:
So far, a lot of Canadians seem to be very interested in properties in the Bahamas.

Shafiq:
Why is that?

The Bahamas investment attaché:
There are two advantages. One, it’s a beautiful country, in the first place. But there are also a lot of Canadians building homes or purchasing condos, apartments, and then putting them on the rental market. There’s a very, very aggressive real estate rental market for short-term rentals. And so the Airbnb, the other, Home Away From Home-type rentals, seems to be attracting quite a bit of Canadians.

Then, there’s the tax benefits of investing in the Bahamas. No income tax, no capital gains tax. Anything that you invest, you’re pretty much getting all the returns tax free. That’s a very, very big incentive.

Shafiq:
Do you get a sense of how Canadians feel about our domestic real estate market in your conversations?

The Bahamas investment attaché:
It’s a good investment for those that can afford to purchase real estate, because there’s a good return, apparently.

Shafiq:
How many properties are in your portfolio altogether?

Investor:
In total, approximately 10.

Shafiq:
You personally, have you been forced to raise rents to account for the rising interest rates?

Investor:
Yeah, I mean, we have. Luckily, some of my units are not under rent control, so we’ve been able to raise them to help cover our costs because obviously some of them have huge costs due on a variable mortgage.

Shafiq:
How much did you raise those rents?

Investor:
Reasonable amount, you know. Never what the market was, a little bit below to let them know we want to work with them. So you know, maybe $200 to 300 on a unit that might be renting for $2,300.

I know I’ve heard horror stories of people increasing $500 to $1,000. But we’re just trying to keep it reasonable because it’s way easier to keep the tenant than try to replace them as well.

Shafiq:
So, how have your tenants responded when you’ve raised rents like that?

Investor:
Fairly positively. They know what’s going on. They know what the alternative is.

Shafiq:
What’s the alternative?

Investor:
Good luck trying to find a rental. It’s a nightmare out there. People are charging up to a year to two years of rent upfront, if you’re lucky to find a place.

Shafiq:
You said these properties wouldn’t get built without investors. But there are alternatives to for-profit housing, like non-profit housing is increasingly part of our national conversation.

Why isn’t that a model that would allow for new housing? Why do we need to only think about the for-profit model?

Investor:
That’s a great question, by the way, and that’s an epic failure of leadership. That’s a failure of government.

Shafiq:
Do you have any non-profit investments?

Investor:
I personally don’t have any non-profit investments. I do have a non-profit charity. We provide mindfulness and yoga training for children.