The Investor Dilemma

I was recently asked by a “small” investor/landlord what the likelihood would be that an “above guideline” rent increase would get approved by the Landlord & Tenant Board (LTB) given the fact that his expenses are about to increase astronomically when his mortgage renewal goes through.


The short answer is there is no chance whatsoever that that would get approved….


The longer answer is that there are a lot of complexities to this issue because what is good for a landlord is not necessarily good for a tenant, & vice versa.


For properties that fall under rent-control rules, the approved rent increase for 2023 was 2.5%. The approved rent increase for 2024 is 2.5%. Meanwhile, landlords’ expenses have sky-rocketed with insurance up 25-30% & mortgage costs up by more than 30%.


Every investment comes with a certain amount of risk. And to be fair, it’s not the tenant’s responsibility to help a landlord cover their expenses. It’s the landlord’s responsibility to provide a livable space to a tenant for an agreed upon price, at agreed upon terms.




The reality of rents not covering expenses means that landlords have a shortfall that needs to be covered somehow every month. And let’s face it, the goal of investing is to make money. released some research earlier this year that said that the average advertised rental price in April was up 20% from pandemic lows in April 2021. And that the average rents across Canada were up 9.6% compared with April 2022. Read more in this article HERE


So that’s the kind of spread we’re talking about….


Or to make it even clearer with a real-life example, a small investor bought a sweet little property in 2021, rents were great, life was good. His variable rate mortgage is now $1,900/mo on his $1,100/mo rent & due to his particular financial situation, he has no choice but to bail out. $27.50/mo (2.5% rental increase) doesn’t do much to help his $800/mo shortfall…


But here’s where it gets really tricky:


Who is willing to buy an investment property that costs them money each month rather than pays them money each month (or at the very least is cashflow neutral)? So now we’re talking loss of value to the property itself, because it’s not an investment that makes sense to a prospective purchaser unless they’re getting a deep, deep discount on it! Capital gains just pile on to this already painful scenario that some landlords & would-be sellers are caught in.


Taking rental properties/units off the market also means less rental opportunities in our already critical housing supply shortage environment.


Less rental supply means higher rents & more competition for the existing supply.


 I know, I know, it feels like I'm always the voice of doom & gloom as I try to educate &  provide context to what's currently going on in the market! Sorry!


So here is the dilemma….


Should existing investors hang on? Extending amortizations to lower monthly costs until rates start to come down again?


A CIBC Landlord Poll found that 74% of homeowners believe that even with a negative cash flow, the tax deductions available to them can help make an income property a worthy investment. Read more about that HERE


Or should existing investors sell their Ontario rentals & buy in other provinces, overseas, or in the US, basically anywhere the laws governing tenancies are more fair to landlords & the price-points are likely to be lower as well.


And what about those who want to get into investing in real estate now? Or really, just get into the market, period.


Warren Buffett famously said “be fearful when others are greedy & be greedy when others are fearful”. Market and/or economic downturns are the best time to find the opportunities that will help you get ahead!


New investors can focus on units that are not covered by rent control, however they do need to stay in-line with “market” rents regardless of what their expenses are.


First-time homebuyers may find that this is their moment as well…writing about capitalizing on others’ misfortunes has a lot of “ick” to it, but that’s how our system is set up 🤷

Want to chat more about your real estate options? Call or text me at 647-697-4071 or email

Additional Reading:

Analyzing An Investment Property HERE

Do The Math! - this was an email out to those who get my Mid-Month Note but I'd be happy to send it to you as well, just ask!

Until next time,