December 2025 - Money Machine - Location, Condition, Price

Last month, we looked at how the residential rental market is shifting from being a market where rental units were in scarce supply, and tenants had a tough time finding adequate accommodations, to one where there was a relative abundance of vacant rental units and tenants had a choice. And looking at the forces that were bringing about that shift, it’s safe to say that trend is likely to continue. So, what should landlords do to best position themselves in a ‘renters’ market? It’s been said that the three most important factors when it comes to real estate are ‘location’, ‘location’, ‘location’. We always think of that in the context of real estate sales. A home in downtown Toronto, all things being equal, will bring more money than the same house in downtown Sudbury. And a house in downtown Sudbury will bring more money than the same house in a remote hamlet 80km out of town. And of course, the same thing holds true within any municipality. There are prestige areas of town, and there are marginal areas of town. Homes close to desirable amenities and homes close to industrial parks, hydro lines and railways. Well, the exact same principle holds true when it comes to rental. There are areas in high demand and areas that would only be rented by default. Now I realize that if you are already an established investor, you can’t do anything about the locations of the properties you already own. They are where they are. But when you are shopping for your next investment property, give careful consideration to its location. If it’s a multi-family building, then existing zoning will, to a certain extent, dictate its location. But even here, pick a location that is in the best part of town. Close to amenities. It will be adjacent to other zoning designations. Pay attention to what they are. A unit closer to upper-end residential homes is going to be more desirable than one that butts up to an industrial park. Pick a location where you’d be happy to live. As a general rule of thumb, if it’s a place you wouldn’t want to call home, neither would the ‘better’ tenants out there. Too often, I’ve seen investors buy in really marginal areas because the returns are good. The numbers work. This is a mistake. It’s short-sighted. It'll work for you when the vacancy rate is extremely low, but you’ll have a tough time when things loosen up. Now let’s talk about condition for a minute. Any time a tenant vacates a unit, there is an expense involved. Repairs need to be done. The unit probably needs painting. And over time, it just gets tired and could use an update. A lot of landlords have been reluctant to invest the money. Tenants won’t value or respect a pristine unit, they figure. And anyway, I can always find somebody to rent it just the way it is. Well, maybe not. That may well be the case when vacancy rates are extremely low, but once things loosen up and tenants have a good selection, the old, tired, poorly maintained units will be passed over. You’ll be left with tenants that are hard to house and generally high risk. So, my advice is even in times of very low vacancy rates, spend the money and make the effort to keep your units up. Replace the soiled carpet with good-quality hard surface flooring like luxury linoleum or ceramic. Replace the kitchen cupboards. Update the bathroom. Perhaps if it’s boiler heating, install a wall-mounted heat pump for A/C. Do the things that are necessary to make your rental unit shine compared to the competitors out there. And then we come to price. No question the rental unit that is in a desirable, highly sought after location, and one that is good quality throughout and in good repair, will command a higher rent. And it should. But avoid trying to squeeze top dollar out of the rent. Aim to be just on the low side of market rent. Be in a position where you are in the driver’s seat, selecting the best tenant option from a number of applicants, not the other way around, where your unit is picked over and continually passed over in favour of something else that’s available and just a bit better value.