Investors buying new condos to later rent or “flip” (sell quickly for a profit) provided serious fuel for the housing boom of the last decade, but as units have been delivered, tensions have risen between owners who live in their condos and those who want to rent them out. What impact, if any, do renters have on a condo building? What limits, if any, should be placed on the number of condos that can be rented? There are many different takes on the matter, and as the market cools off, the opinions seem to heat up. Here are two views, from real estate agents.
“I do think the number of renters affects the property value,” said Marla Nyberg, a sales agent with Sudler Sotheby’s Realty. “The only reason is, owners typically tend to take better care of their units than renters.” This is a common view: the renter is literally, less invested than the condo owner in keeping the place nice. “A lot of the buildings have put into their bylaws, no more than 20 percent” of the building can be renter-occuppied, Nyberg continued. Which means that if you’re planning on buying a condo to rent it out, you’ll want to make sure that you won’t be stuck on a waiting list.
But even if your building allows up to 20 percent of units to be rented, that doesn’t mean it should, according to Mario Greco, a sales agent with Rubloff Residential Properties who has noticed an increase in the number of condos on the rental rolls, said, “A good mix is probably no more than 10 percent.” He thinks many buildings have set their limits at higher levels, of around 20 percent, so that they don’t scare off investors. “So much depends on pre-sales. If they don’t allow investors, they limit the number of presale contracts they can get.”
Lenders generally require that a certain percentage of units (often half, these days) in a project are sold before the builder can break ground. Some buildings have much higher percentages of rentals than 10 to 20 percent, and some observers think there’s nothing wrong with that. We’ll be hearing from theirs and other voices on the issue. In the meantime, click on “Comments” to give us your take on the great rental debate.