In planning for the up-coming rental season, it’s good to know what sort of weather we’re heading into. Are we talking about a flurry of vacancies or scattered showers of good tenants looking to move?
The data is wonky right now, and so we need to delve a little deeper to prepare ourselves properly.
According to data published on Rentals.ca and Padmapper.com average rental prices have declined across most Canadian cities. In Montreal, Rentals.ca reports a modest increase (4%) year-on-year while noting a month-on-month decrease of 1%. Padmapper’s stats are more depressing; their stats show rents have decreased an average of 13% in the past year.
What’s going on? How can rents go both down and up at the same time?
First, let’s correct for rent-control. As rent controlled units “turn over” and prices are corrected to market standards, rents are inevitably dragged upward. Consider a rent controlled unit (let’s say a 5-1/2 renting for 700$) where the tenants leave. The landlord renovates and rents the unit at today’s (pandemic afflicted) market value (let’s say 1200$ instead of 1400$ in 2019). The statistical average of rent prices across the market may increase even if current market value goes down.
Vacancy rates are high at the moment in Montreal (6%), according to CORPIQ.
This could lead one to understand that current market value for rent has and will continue to come down (say from 1400$ for a 5-1/2 to 1200$), but that rent controlled units turning over can still be corrected upwards.
What’s a landlord to do?
Economic and demographic trends right now will make it difficult to rent units at the same dollar amounts as July 2019. Sorry folks, but the cavalry probably won’t arrive by July this year. Foreign students and immigration likely won’t be back to normal levels by summer, and neither will tourism. Forget about maintaining the rental value of higher-end units in the downtown core and elsewhere. You may have to adjust your expectations downward by a few hundred dollars to attract decent tenants this year.
In lower-income brackets, the same might be true. Low-wage earners have been hit hard by the pandemic (CIBC estimates a 20% unemployment rate). Good tenants for lower-end units will likely be harder to come by this July.
A few tips.
- Go easy with your rent increases this year, especially if your units are rented at market value. If tenant-turnover will force you to review your rents downward, why not work to minimize it?
- Work to keep your tenants happy, especially if they’re paying market value. A vacancy might not bounce the ball in your favor this year.
- Be aware rental season is likely to be a bit difficult. It’s time to think about incentives (like offering one month free) or clever marketing (professional photos). In a rent-controlled environment, these strategies are better long-term than dropping your price.
- Keep your eyes on the rent control mechanisms. If you let your rents get adjusted down, it will be difficult to increase them again. Try leasing your units at pre-pandemic prices and offering a discount.
Don’t forget : The Tribunal Administratif du Logement (or the artist formerly known as the Regie du Logement) released the Calcul 2021 this week.
Find it hereRental & increase season is upon us folks!Data for this article:https://montreal.ctvnews.ca/montreal-rental-vacancy-rate-hits-six-per-cent-highest-in-years-but-prices-don-t-seem-to-be-dropping-1.5277351
https://terrieschauer.com/wp-content/uploads/2021/01/5-Ways-to-Make-the-Most-of-Covid-Restrictions-Terrie-Schauer.jpg 300 820 Terrie Schauer https://terrieschauer.com/wp-content/uploads/2018/03/TerrieSchauer_Logo_RGB_Stacked-1030x525.png Terrie Schauer2021-01-14 18:04:312021-01-15 16:53:255 Ways to Make the Most of Covid Restrictions
Challenges & Opportunities for Real Estate Investors in 2021
“Not so fast,” said 2021 to those of us who were hoping to leave the Covid mess in 2020. Funny story from the property manager’s desk: bathroom tile is non-essential in Quebec. The plumber can make holes in the wall, but the maintenance guys can’t always buy the material to fix them.
For all of us, boredom and social isolation are compounding like credit card interest.
No one said these next months are going to be easy, BUT – people – the time will pass anyway. Why not have something to show for it?
The question we should be asking is: how can I use this time wisely?
Here are some ideas.
1. Invest in Coaching.
Social isolation can be depressing. It can also be difficult to stay motivated and accountable if you don’t have to put pants on in the morning. One way to create deadlines and inspiration is to hire a coach, especially if the program they sell has action-items or deliverables. A bonus is the added FaceTime with someone (hopefully) inspiring to you.
Consider defining what skills you want to learn or level-up this year and invest in some coaching. What better way to use the March break budget?
2. Purchase Instructional Videos
What aspects of your game do you want to level up? Want to learn more about creative financing? Finding deals? Putting together joint ventures? There’s no time like the present to focus on the parts of your Real Estate game that might be lagging behind. Instructional videos are a cost-effective way to accelerate your levels of knowledge.
3. Focus on How You Can Leverage Technology
Environmental pressure is the biggest driver of evolution. In the face of stress in the ecosystem, species adapt or go extinct. Technologically there is a giant leap forward going on. A year ago, very few people used Zoom or ordered groceries online. Today my parents in their late-70s use these services. The rapid advancement, adoption and deployment of technology is going to be a lasting aspect of the Covid-crisis.
How can you leverage or become proficient at apps or online services that industry leaders use? How can you use technology to become more efficient in business and in your personal life?
4. Audit Your Personal Habits
Are the choices you’re making every day hurting or supporting your health, energy levels and success? Maintaining a healthy routine is definitely made more challenging with gym-closures and lack of access to social energy. The home office is also dangerously close to the fridge.
Wake up call: the choices you make now will have lasting effects, either negative or positive.
Take 5 minutes this evening to scan your personal habits and see if anything needs a bit of correction.
On the flip side: are you open to “hacking” your personal habits with technology? WeightWatchers has an awesome app for tweaking (or overhauling) your diet. You can also get the most out of your home gym with a work-out app like FitBod. It adjusts daily workouts to your equipment and fitness level, levelling up as you get fitter. It’s also a great way to combine points 3 & 4.
5. Separate Enduring Changes From Temporary Ones
When mass-extinction events have taken place in the past, the species that have ended up with a bigger “slices” of ecological Real Estate are the ones who’ve managed to adapt. As we go about our (constrained) daily lives, try to identify the trends that are going to be long-lasting.
Perhaps tenants- and home-buyers will continue to favor larger units as working- and training at home become enduring fixtures of the post-Covid world. Will the move to online education diminish the number of exchange students? How will this affect downtown rentals? Are the trends in the short term rental market likely to outlive Covid? What about the low-interest environment?
As you look into the medium-term future, do it with a mind to adapt to permanent changes, while not over-reacting to those that are not.
Yours in Real Estate Investing,