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RENTAL CONVERSION STRATEGY

The supply of rentals grew considerably in recent times. If this is true than it is possible that market value of condominium apartments may decline further. It will depend on the composition of condo ownership. In the downtown rental market many of those units are owned by investors. Say an investor owns a unit and has difficulty finding tenancy, than it is probable that, that unit will eventually come up for sale since the investor relies on rental income to service mortgage debt. Hence, we have a classic situation of increasing supply relative to demand. Compounded by the fact that the stress test has been recently weakened in an ultra low interest rate environment, many tenants may become owners. I think a good strategy for a landlord in trouble is to offer a tenant a buying opportunity on favorable terms - i.e. Vendor Take Back mortgage. A VTB to a newly converted owner is to some degree the flip side of rental income but now from a mortgage investment. #recg #torontorentals #realestateappraisal #valuations


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