Toronto Star -Condo Rental Service Makes for Effortless Landlording
September 28, 2024
The Toronto Star Saturday, December 15, 2001
Condo Rental Service Makes for Effortless Landlording
By: Sheila Kieran
With condos having become the major source of rental housing in Canada’s largest city, Gerry DiLeo’s business makes eminent good sense: managing and leasing condos on behalf of investors and owners. This is not building management, but an arrangement that protects the increasing number of investors — more individuals and small companies than large corporations — whose portfolios include one or more condo apartments.
DiLeo, trained at Ryerson as a civil engineering technologist, used his
technical background, as well as experience in construction, land
development, sales and marketing, to create the Rental Lifestyle Group. It began, he says, when he saw the “need and opportunity to create a branded presence in condo leasing and management, without the bias present in condo builders or management companies”.
With friend Larry Morassutti, a real estate, a chartered accountant, who is also an experienced property manager and appraiser, he started the company in 2000, after the two had been involved together in other projects for more than five years. The partners found their target market (people or small companies that own 15 to 20 units) by researching assessment roles and dealing with condo developers and owners.
Currently, DiLeo’s company is managing more than 1,000 units, which range in price from one-bedrooms at just under a thousand to luxurious
two-bedroom-and-den units for $4,000 a month.
Despite a softening in the condo-rental market, a quarter of all condos
are still being rented out. “We think that, because of the roller coaster stock market, that purchase-for-investment trend will continue. What has changed is that, in the 1980s, the idea of investing in a condo was to ‘flip’ the property for a quick profit. Now, the goal is to create a cash flow as part of a diversified investment portfolio.”
Moreover, condos generate higher rents than apartment building units,
because, DiLeo says, “condominiums offer such amenities as health clubs, recreation facilities, party and board rooms. This is perfect for owners seeking rental tenants; they need a certain level of income, which they can realize at a time when the market demand is high and Toronto is going through a period of low vacancy rates. That, alone, will dictate higher rents.”
DiLeo quotes Canada Mortgage and Housing Corp. figures that indicate this year’s vacancy rate in rental condos was a tight one-tenth of one per cent (i.e., one vacancy for every thousand rental condos).
CMHC statistics also show that, as of July this year, 18,000 units were
under construction in the GTA, half again as many as last year. Over the next two or three years, the result will be more apartments on the market; depending on the general economic outlook, that could mean more condo vacancies or even a softening in prices. Whatever happens, DiLeo sees the increase in construction as leading “to an increase in the number of investors looking to rent out their units”.
While “the condo universe is expanding rapidly”, DiLeo says, his Rental
Lifestyle Group focuses on long-term (i.e., minimum one-year) leased
properties rather than on daily, weekly, or monthly furnished rentals in hotel-cum-condo projects.
What determines the price renters are willing to pay for an apartment?
DiLeo lists the essentials as: location; condition and decor; amenities in the suite and in the building; finishing touches in the interior (i.e., large baseboards, crown mouldings); and, finally, that extra “something” — whether it’s friendliness at the front desk or sunlight in the suite – that gives people a good feeling about the place.
DiLeo sees his job as making condo investment easier: the company places ads, takes calls and identifies, selects, and screens prospective tenants. This means checking credit records, getting information about previous rentals, examining employment history — anything necessary to ensure that the occupant will take care of the suite and pay the bills.
DiLeo points out that “Many investors are not accustomed to exercising the necessary care when renting and jump with euphoria when someone likes their unit. It’s in the owner’s interest to have a third-party professional who will carry out all aspects of due diligence.”
DiLeo’s company also ensures that the lease is consistent with the condo’s declaration and that prospective tenants know the rules and regulations.
The cost of the service depends on the number of units involved, but, in general, is from three to five per cent of the monthly lease rate.
Rental Lifestyle Group offers other assistance such as collecting rents, making necessary repairs and generally maintaining the condo’s physical upkeep. Owners also receive regular revenue, expense, and profit statements, appraisal services, and market-condition reviews.
Even for a sceptic like me — years ago I rented out my house and, in the midst of a lively market, even managed to lose almost $12,000 on the deal — this sounds like easy landlording.