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Prices: $950,000
Neighborhoods: Mount Dennis
X-factor: Conveniently located and competitively priced, this detached house, divided into three rental apartments, might be an appealing secondary property for a seasoned investor or landlord. The current rents are well below market price — each of the house’s three units costs between $1,280 to $1,230 monthly — so a future owner might need to think creatively to recover the investment.
But the property is versatile. An investor could keep the building as-is and take on three long, reliable tenants, or they could offer “cash for keys” and significantly renovate.
Here’s what the sale of a house like this could imply for its tenants and future owners.
Who’s the right buyer for this property?
One of the home’s listing agents, Yuri Kvyetko, and real estate expert Othneil Litchmore agree: this is a property best suited to a seasoned investor, most likely someone with experience managing tenants.
“I don’t think this is a good pick for a first-time investor,” said Litchmore.
Kvyetko, who represents this property in partnership with Caleb Reinhardt Jarvine, agreed that the house is “perfect” for an experienced investor. According to Kvyetko, the current landlord is also acting as property manager but a new owner “could hire a property manager if they wanted.”
If the new owner wants to renovate, what would that mean for the tenants?
Litchmore said there’s not much a future owner can do to increase the rents outside of a “cash for keys” scenario, in which a landlord offers tenants a significant sum of money to move out.
“You can offer them a few months’ rent,” said Litchmore. “I’ve heard offers go up to $20,000, sometimes $25,000. If a landlord really sees an opportunity with a property, that can be worth it,” he said.
Litchmore added that a “cash for keys” deal would allow an investor much more flexibility with the property: they could renovate the home themselves and rent out the individual apartments at a higher rate, or they could put the whole home back on the market at a profitable price.
Benjamin Ries, executive director of South Etobicoke Community Legal Services, said in an interview that “cash for keys” can work in a tenant’s favor when, for example, a tenant already plans to move out. If that’s the case, Ries said, it’s best to keep that information to yourself.
Ries said that in most cases tenants are entitled to compensation from their landlords — and it’s in their best interest to research that. “Lots of tenants don’t know the compensation they’d be entitled to,” he said.
While some of the appliances in this home are a little outdated, Kvyetko said the current tenants have not complained, meaning an investor could likely keep on those tenants without putting in significant renovations.
As well, the current owner has recently installed a new furnace and hot water tank, which are often two major expenses for a potential landlord.
My landlord has told me they intend to renovate or move into my home. What are my rights in this scenario?
Property owners are legally allowed to displace tenants as long as the owner or an immediate family member plans to live in the unit. Unfortunately, according to Litchmore, tenants in this situation often have very few rights.
“You can appeal to the Landlord and Tenant Board, or apply for what’s called undue hardship,” he said. “If you apply for support (from the government) in that situation, you can stop or delay the eviction based on undue hardship. That can buy you some time.”
Ries advised that tenants in a “renovation” should always demand the proper paperwork.
“Landlords can only give that notice when they intend to do work … and the municipality needs to agree that this work is so extensive that it’s not compatible with a tenant continuing to live in that unit while the work is being done,” he said.
“The law says a tenant has the right to … move back in when the work is done, at their old rent,” added Ries, but “there’s no way to have that right unless you receive the N13 form.”
“Tenants can misunderstand or underestimate the cumulative effect of paying a higher rent … a ‘cash for keys’ deal of five or even six figures (could be) potentially still not a great deal for the tenants.”
What resources are available to tenants in a renovation?
Firstly, “do not sign anything,” said Ries, and take a second, third and even fourth look at the paperwork, preferably with a housing advocate in tow.
As far as resources go, “there’s the Tenant Duty Counsel program … geared to people who have a case in front of the Landlord Tenant Board,” he said. “And for lower income tenants there’s always their local community legal clinic.”
“Housing is becoming less and less affordable to more and more people … so it’s best to be diligent in a scenario like these.”
Correction — Jan. 16, 2023: This file was updated to correct that the property is located in the Mount Dennis, not Junction, neighborhood.
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