Apartment Rentals

by Darrin DeRoches November 17 - 23, 2011

My brother just moved back to the city and was looking for a two bedroom apartment and I was surprised at the prices and lack of inventory. I told him to look on kijiji and to drive around his desired neighbourhood and look for ‘for rent’ signs. The first couple of weeks he came up empty and when we discussed his search for a two bedroom in the Durand neighbourhood was averaging over $1,100 dollars a month. All the apartments that he was looking at were either old or dumpy or over his budget of $1,000 dollars a month with heat and hydro. I have a couple of rentals in the area and my rents are in his budget– so I was a little surprised. I began to look a little closer at the rental market and realized that he was indeed correct. A decent two bedroom in a house was averaging around $1,100 plus utilities.      I bought my first duplex about 15 years ago and the two bedrooms were going for $865 plus hydro. That same apartment is renting for $1050 plus hydro today. About a 20 percent increase in 15 years, which is behind the allowable increase or rate of inflation? If I was to actually calculate the proper increases the apartment would be over $1,200 dollars a month. The value of the house the apartments are in has actually doubled plus in the 15 years but the rent seems to be under market value. My brother found a very nice older apartment in the heart of the Durand neighbourhood for $995 a month with utilities but has no parking and is a little small – but a great area and very nice apartment. It took him about a month and he viewed only eight apartments, since there were not that many available.     A couple of months ago I sold a home to an investor on Aberdeen. He is in the process of waterproofing the basement and is preparing to convert the home into two apartments with two bedrooms each. He brought by an older investor/property owner and showed her the progress of the project. She asked him what he was going to ask for rent on each of the apartments. He told her about $1,000 a month for each two bedroom. She told him he was nuts and he would be lucky to get $800 a month. He called me in a panic since he is relying on the income to make the project work. I brought him over to my duplex on the same street and showed him the apartments that are rented for $1050 a month and he was impressed. The apartments have hardwood, granite kitchens and updated baths. His project will have all of this plus glass showers, dark woods, brand new windows and doors etc. After viewing my property he is comfortable to rent his apartments for at least $1100 each though I suggested he ask $1200.     Moral of the story is a quality apartment will get top dollar!   V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.