Important Tips When Buying A Tenanted Condo

By: Thomas Cook

Important Tips When Buying A Tenanted Condo

 

With the condominium rental market so strong in Toronto, there’s a high probability that the condo you look at and fall in love with will be tenanted.
 
There are some advantages for you to look at tenanted suites IF you have a bit of imagination. 
 
Why is this important?  Well, one reason is that a good proportion of tenanted suites will not show as well as an owner-occupied condo unit.  This will put off a number of prospective buyers who cannot see ‘through the dust’ as it were and give you a better chance to negotiate a good price.
 
If you like the layout and location of the condo unit, usually all that’s needed to make it show really well is perhaps a coat of fresh paint and maybe a really good cleaning.
 
The second reason is the current investor-owner may be more motivated to sell.  He or she could be tired of dealing with tenants or just want to cash out so there’s again an opportunity here to strike a deal.
 
There are some things to watch out for however.  First is the status of the tenant’s lease.  If their lease has 4 months remaining on it and you want to move in 2 months, you’ll have an issue.  The tenant’s lease supersedes any sale and therefore the tenant will have the right to stay till the end of their lease.  Only after their lease expires will you be able to take possession of the condo suite.
 
If the tenant’s lease is now month-to-month you still have to be cautious because, without giving them the proper notice, the tenant could remain on the premises after title changes hands over to you.
 
The way the Residential Tenancies Act works, the existing owner must give any notices to the tenant.  One of the forms deals with the issue of giving notice to vacate the premises for the buyer’s own use (Form N12).
 
The proper way to arrange to have vacant possession on closing so you can move right in is to have these two specific clauses in your offer...
 
The Buyer hereby authorizes and directs the Seller, and the Seller agrees, when this Agreement becomes unconditional, to give to the tenants the requisite notices under the Residential Tenancies Act, (Notice to End your Tenancy Because the Landlord, a Purchaser or a Family Member Requires the Rental Unit - Form N12) requiring vacant possession of the property for use by the Buyer or the Buyer's immediate family, effective as of [DATE] and the seller agrees to deliver copies of the requisite notices to the Buyer immediately after service of the notices upon the tenant.
 
Seller acknowledges and agrees that he must provide vacant possession on closing.  Seller further agrees to provide Agreement to Terminate Tenancy forms (Agreement to End the Tenancy - Form N11) signed by the existing tenants agreeing to vacate by [DATE]  to the Buyer within 7 banking days of removal of all conditions.
 
Having the Agreement To Terminate Tenancy form signed gives you a bit of added security.  Once the tenant signs the Form N11 they’re committed irrevocably to vacating the suite on the date you want.  Sometimes a ‘seller bribe’ to the tenant is necessary to facilitate this signing but not always.  I’ve done these many times over the years.
 
Since most leases end at the last day of a month, I always suggest you set your closing date about 1-2 weeks after that date.  This will give time for the tenant to fully vacate and for the condo owner to clean up a bit before you take possession.
 
If you’re currently renting, I’d suggest giving your own landlord notice to vacate for the end of that same month and taking the rest of the time to paint any walls that need it and do any fix-ups that you’d like to do before moving in.
 
If you’re planning to buy a Toronto condo in the next 3-9 months, many of my clients have found that it was a good plan for them to meet with me for 30-45 minutes as early in the process as possible to help them set up a home buying plan.
 
Would you be open to doing that?
 
Thomas Cook
Email => Thomas@LivingInToronto.com
Text => 647-962-1650

INVESTOR UNIVERSITY

 

Investing in real estate is one of the best things you can do to secure your future retirement years.   I encourage everyone to take advantage of the excellent, leveraged ROI that real estate provides.

Of course, you need a seasoned Realtor to help you with your purchases to make sure you’re making an excellent buying decision but that’s not all you need.

Once you’ve purchased, the two things you’re going to look forward to are finding the best tenant and, when it comes time to sell, dealing in the best way possible with the capital gains tax that our lovely CRA will want to collect.

I’ve written books on each of those two subjects and the Investor University information is derived from them.

You can read the chapters you’re most interested in on the Investor page (then see the Menu on the top right of the page) OR you can download each (or both) of the books as a PDF which you can then read at your leisure.

You can download the Guide To Attracting The Best Tenants here.

You can download Get The Best Capital Gains Tax Advice For Smart Investors here.


Keep Up To Date With Toronto's Real Estate Market
 
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Here are 5 proven ways to move safely and smartly towards your real estate buying goal...

  1. Download a free copy of my Ultimate Home Buyer’s Guide book
Find out everything you need to know about buying a Toronto house or condominium. Instead of randomly searching all over the internet, jump start your home buying experience and get a wealth of expertise and experience in one place.

Download your Guide here

 

  1. Get a custom listings search set up for you and receive targeted listings daily
If this list is not specific enough for you, we can put together a custom list of homes.  Maybe you want only 2-bedroom condos in specific neighbourhoods, or only semi-detached houses, or even a certain school zone. 
 
We can set up your HOMEWatch search for any area you choose (not just downtown Toronto), and you'll get immediate access to homes within minutes of them being listed.  Just leave some search criteria here

 

  1. Set up a step-by-step plan with the best ways to get to your home buying goal
At the beginning of the home buying journey, often the picture of what the end result might look like is a little ‘fuzzy’.
 
Our first-time and move-up buyers have told us that being able to meet with us on a casual basis as early in the process as possible, even if their purchase date was 6-12 months away, really worked the best for them.

To arrange your no-obligation Starbucks Strategy Session, click here.

 

  1. Join us for a Market Experience Tour - pick your favourite neighbourhoods and price range
Start getting educated about what your condo likes and dislikes are. 
 
The Market Experience Tour is a great way for you to figure out which neighbourhoods and condo buildings are right for you, and you’ll also get a good sense of what’s available in your price range.
 
Pick the date and time you like to go on your Tour.

 

  1. Don’t start your home buying experience on the wrong foot - Meet for a Buyer Consultation first!!
Home buyers have come to us after trying to work with another agent saying “I don’t think he even knows exactly what I’m looking for and I’ve got questions he doesn’t have the answers to”.
 
Don’t make the same mistake.  Let’s set a time to meet and go over how the complete home buying process works, find out what your likes and dislikes are and what pitfalls you’ll want to avoid, before you seriously start looking for a house or condominium.
 
This is the best 90 minutes of time you’ll ever spend - set up your private Buyer Consultation.