The point of this post is to illustrate anecdotally that rents are going up and going up fast for downtown properties, especially condos in brand new buildings on high floors. This is food for thought to the crowd that says the prices like $650-$700 per square foot for pre-construction condos are completely unsustainable because they will never carry themselves with 20-25% down. Three or four years from now do you think rents will be higher or lower than they are today?
i find the examples of a 852 sq ft 2 bedroom unit
with parking, they were renting out for $2500 in October, $2600 in November, and $2700 in December abit deceptive:
- this isn't new ... typical rents for the dt core ranges from $30-36 psf gross (no parking, + utilities, excluding Yorkville). this has been the case for a decade.
- parking is included with unit, that has a value of $150-200 / month ... i typically would not include that in the calculation psf
- without knowing full details as to what floor, upgrades, views, exposure, any locker, etc .... these will factor into the rent and desirability
- we're not talking about the same unit, perhaps identical layout but not the SAME one. it's not like the same tenant was paying $2500 in October, $2600 in November, and $2700 in December.
- M5V is in midst of completion/registration. from October to December, were more condo amenities completed/finished and made the building more presentable than earlier. there is a discount for living in a construction zone.
working backwards, let's see if the math works:
- 852 sf ft x $700 psf = $596,400
- less 20% dp (since that's the example he used for the SFH) = $477,120 mortgage
- $477,120 mortgage @ 5.25% for 5/25 yr (typical offering by big 5 banks) = $ 2,843 mort / m
(if it was 25% dp = $447,300 mort @ 5.25% 5/25 = $ 2,666 / m )
- property taxes @ 0.8%(current mill rate) = $4,800 = $400 / m
- maintenance fees @ $0.52 = $443 / m + $50 / m parking maintenance fee
- property insurance = $75 / m
in the above, the mortgage already equals or exceeds the rental income.
property taxes, maintenance fees and property insurance haven't been included and that's around $950+/m negative cash flow; or 35% more than current rents.
i guess that's why AL tried to allude that rents went up 8% in 3 months.
are we to extrapolate (erroniously) that on an annual basis that will be 32% ?!?
let's try the Cabbagetown semi example:
$600K - 20% dp = $480,000 mortgage;
- $480,000 mortgage @ 5.25% for 5/25 yr = $ 2,860 / m; that already exceeds the $2,450 rent.
- property taxes @ 0.8%(current mill rate) = $4,800 = $400 / m
- property insurance = $75 / m
- garbage + water utlities = $50 /m
- while there are no maintenance fees, since the owners are out of the country, one may have to pay for lawn maintenance and snow removal since res tenants leases don't usually need to do this = $125 /m
working backwards, $2,450 rent - $650 TMI costs = $1,800 net rent;
the only way the monthly mortgage would be that low is if the $480,000 mortgage is @
1.00% for 5/25 yr ! ! !
http://www.mackenziefinancial.com/calc/jsp/MortgLoanAmortScheduler/mortgloanscheduler.jsp