Buying Rental Property in Waterloo Region? Here’s What You Need to Know
A growing number of Canadians are joining the real estate investment trend and buying rental property of their own.
With the cost of living getting higher for both owners and renters, who wouldn’t be interested in a second income with a monthly paycheque?
Waterloo Region is currently growing faster than Toronto at a rate of 2.6% from 2017 to 2018. A growing population combined with limited inventory has squeezed the real estate market and sent the cost of rent skywards, leading many people to consider taking advantage of the rates.
Is buying a rental property a good idea right now?
Waterloo Region is one of the best places to buy rental property in Ontario at the moment because of six growing trends:
- Rising rental costs: rent for a two-bedroom apartment in Kitchener jumped from $1,200 in 2017 to $1,500 in 2018.
- The Kitchener-Waterloo-Cambridge metropolitan area has the second-fastest growth rate in Ontario (Peterborough is #1).
- There is a large influx of people moving from higher-priced city centres (like people moving from Toronto to Waterloo).
- The young professional demographic (between 25 and 34 years old) is growing dramatically due to the economic growth, career opportunities, and post-secondary institutions.
- Buying rental property in college towns has always been popular, and recently there has also been a rise in international student enrolment at post-secondary institutions in town, adding to the areas growth.
- Some rental property expenses are a tax deduction for Ontario residents (you can read more about how that works here.)
Don’t own rental property yet? Don’t worry, we’ll explain what you need to know before you make that offer.
Buy rental property or invest in your own?
If you own a rental property like a condo, apartment, detached home, or a townhouse, you already have a huge potential for earning extra income.
But what if you own your own home and can’t afford to take on another mortgage? Or don’t have the time to maintain a second property?
You might want to consider investing in your existing property by adding an in-law suite, granny flat or (just recently approved in 2019) tiny home. As a side benefit, adding income potential to your home can also increase the resale value.
Renting a portion of your own property is not for everyone. So if you’ve decided investing in Waterloo Region real estate is right for you, follow the steps below.
How to Buy a Rental Property In Waterloo Region
The good news is buying a residential rental property is far easier than buying a commercial property. The bad news is it’s 100% a seller’s market right now, so you’ll be up against some competition.
The steps below focus specifically on buying a residential rental property in Waterloo Region:
- Review your finances and determine your budget range.
- Choose which kind of properties you’re interested in buying (and can afford) like a townhouse, detached home, condo, semi-detached home, duplex, triplex, etc.
- Use our advanced search to look for new listings every few days. Keep in mind properties are selling on average within 19 days on the market, so once you’re ready to buy you’ll have to move quickly. (Continue this listing research throughout the next few steps.)
- Enlist the help of our easy Home Realty Team. We will answer your questions, help you avoid market mistakes, and send you great potential listings.
- Book a meeting at your local bank to discuss your mortgage pre-approval.
- Complete your mortgage pre-approval application and obtain your pre-approval letter.
- Now that you have seen many listings, begin to narrow your search in terms of features, neighbourhoods, and renovations.
- Book private viewings with your top picks. (Pro Tip: Open houses are typically busy. Private viewings give you more time and privacy to discuss the property with your realtor and/or business partner.)
- When you find a property you want to make a bid on, we can help you determine a bidding strategy. Residential properties in Waterloo Region can get anywhere from 5 – 20 offers on average, so you’ll need a strong offer.
- Once your offer is chosen, congratulations! You’ve become a rental property investor. Your next step is to prepare the unit for living (i.e. are there any renovations required? Is it a home that you are dividing into two units? Is everything in good working order?)
- Is your property in Waterloo? Then you need to obtain a rental license. Is your property in Kitchener, Cambridge, or the surrounding areas of Waterloo Region? Then you can skip to step 13.
- Obtaining a rental license in Waterloo has multiple steps and fees involved. You’ll need to pay a first-time application fee and a renewal fee. They vary depending on the type of license and property you own. You can download the application, inspection forms, and other required assets here. You’ll also need to get a police criminal record check and provide floor plans for your property.
- Create a rental agreement contract for your tenants to sign. You can pay to have one made by your lawyer or download one for free online from resources like LawDepot.
- List your rental property online, review the applications and conduct interviews, then choose your tenant and have them sign your rental agreement.
- Maintain your property by repairing broken items, paying property taxes and condo fees, and providing utilities like heat and water. To avoid complaints and fines, your property must meet the standards set out by the city.
- Remember to renew your license! You’ll receive a notice in the mail when it is about to expire.
Rental Property Regulations in Waterloo Region
Municipalities each have their own rental property bi-laws, so you’ll find the rules differ slightly depending if your property is in Waterloo vs the other cities. These regulations generally apply to all properties:
- You must meet the health and safety and human rights requirements of your residents.
- Pay property taxes and any other municipal fees incurred (i.e. utility bill for sewer maintenance).
- Provide basic necessities to your tenants including heat, water, and hydro.
- You and/or your tenants may not operate a business from your place of residence (i.e. a hair salon).
- If the property you buy is in Waterloo, you will have to pay a landlord license fee which is on average $287.00.
If reports are made against your place of residence, officials have the right to perform an inspection for complaints such unsafe or unclean living conditions.
If you don’t comply with bi-law standards, then you could receive a fine anywhere from $350 – $50,000, depending on the conviction.
How to register a rental property in Waterloo
There are six different types of rental property licenses in Waterloo:
- Class A: Rental units that are not covered by any other classes
- Class B: Owner occupied residential rental properties
- Class C: Rental units with five (5) or more bedrooms
- Class D: Recognized lodging houses
- Class E: Temporary rental unit
- Class Z: Building with four (4) or more horizontally separated dwelling units
Best places to buy rental property in Waterloo Region
There are certain neighbourhoods in Waterloo Region that are better investment opportunities than others because of things like lower property taxes and proximity to post-secondary schools.
Some investors choose to avoid Waterloo altogether because they do not agree with the rental license fees. It has been a controversial topic among the municipalities since it was implemented in 2011. However, Waterloo is home to Wilfrid Laurier University and University of Waterloo, so don’t write it off too quickly.
Doon & Doon South
- One of the most popular and fastest growing rental areas in the region
- Located in the South-East end of Kitchener, it’s a growing area with new amenities and active residential development
- Close proximity to Conestoga College’s Doon and Cambridge campuses
- Many Conestoga students also rent properties in the surrounding neighbourhoods of Pioneer Park and Brigadoon.
- Well-established neighbourhood in central Waterloo bordered by University Avenue and Weber Street
- Close proximity to University of Waterloo, Wilfrid Laurier University, and Conestoga College’s newly renovated Waterloo Campus.
- Excellent access to restaurants, grocery stores, nightlife, and transit
- Long-time popular neighbourhood for student rentals
Mount Hope Huron Park
- Located just outside of Downtown Kitchener, Mount Hope Huron Park runs adjacent to Victoria Street
- Ideal for rental investors because of its close proximity to the innovation district and the GoTrain
- Excellent transit and location to amenities and nightlife downtown
Mary & Allen (Uptown Waterloo)
- Located along King Street just past Uptown Waterloo is the residential neighbourhood of Mary & Allen Street
- Close proximity to restaurants, nightlife, entertainment, services, and Grand River hospital
- Opportunity to invest in new condo developments as well as older detached homes
- Great transit with access to both LRT (Allen Street stop) and GRT routes throughout the area
Kingsdale / Vanier
- An urban residential neighbourhood South-East of Downtown Kitchener, it’s bordered by Courtland Avenue, Fairview Road, and Highway 8
- Close proximity to the 401, LRT, GRT routes, and the Fairview mall transit hub make it very appealing for out-of-town investors
- Fairview road is lined with amenities including restaurants, grocery stores, Cineplex, and one of the largest retail centres in Waterloo Region – Fairview Mall.