Many condos have rental restrictions.

Many condos have rental restrictions.

Many condos have rental restrictions.

 

When I was condo hunting earlier this year, a big consideration was whether I should  buy in a complex that allowed rentals. 

Condo buildings have bylaws that might restrict whether you can rent your unit out, so it pays to check the  bylaws carefully before you make an offer. 

Rachelle Berube, President of Toronto's LandlordRescue.ca, believes that for owners who don’t intend on renting, a building that has rental restrictions, or does not allow rentals at all, might be best. 

“Owners have a stake in the building,” she says. “For the most part, they understand that if they dirty the building, they pay for the clean up – so they just don’t do it. This applies to a wide range of issues [like] noise, cleanliness, pet restrictions, and damages. In a perfect world, you can’t tell the difference between owners and renters. It’s only when things go wrong that it becomes an issue.” 

While having any sort of rental restrictions will always lessen the pool of potential buyers, it doesn’t seem to negatively affect the price in which the unit will end up selling for. 

For example, in a downtown Vancouver Ownership, Occupancy, and Rentals study conducted by BTAworks, the consulting division for Bing Thom Architects, median values for owner occupied units were generally valued over $30,000 to $40,000 more than non-owner occupied units.  

Adam Goss, Realtor and condo specialist at Park Georgia Realty, believes it’s because owners often purchase with their wants in mind. 

“Owners are willing to pay more for units with a better layout, or a nicer view,” he says. “They generally are more willing to invest money to improve their units and make them nicer, because it helps them improve their overall quality of life – which is why owner occupied units usually sell for more. Investors who rent out the units they purchase are only concerned about their bottom line.” 

Goss also cautions that while allowing rental units might open up the market to more buyers, it could also affect the price of the owner occupied units in the building when it comes time to sell. 

“A rental unit in a condo building will typically take longer to sell, and typically won’t sell for as much compared to an owner-occupied unit. Which means that an owner occupied condo in the same building that is for sale, would have to use the rental unit price as a comparable.” 

2009 Vancouver Condominium Rental Study showed that 68 per cent of downtown Vancouver condos either prohibited rentals completely, or only allowed rentals with restrictions. So if you plan on purchasing and living in your condo, you immediately open up your options to all condominium buildings. However, if you are set on owning in a building where you could potentially rent in the future without any restrictions, you would be limiting yourself to just 32 per cent of the condo market. 

I ended up purchasing my home in a building that does not allow rentals. The reason I chose to live in an owner occupied building is because I have no ambition to become a landlord I also feel that living in an owner-occupied building creates a sense of community that I was never able to find in the past condo rental units that I’ve lived in. 

What are your thoughts about buying in condo buildings with rental restrictions?
 
Source Photo and Text: Moneyville
Serge Younan

Serge Younan

Real Estate Broker
CENTURY 21 Leading Edge Realty Inc., Brokerage*
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