The nightmare

Thomas (‘don’t call me Tom’) and his squeeze are mid-50s, own a bung in the burbs and bought a condo downtown where Martha, 23, lives. The unit was finished in 2024 – almost four years after the couple put down their deposit – and rents to the young woman (she works for the city) for $2,800.

“The plan was always to have an investment property as part of our retirement income,” Thomas says. “We don’t have pension plans, and we don’t trust the stock market too much, so this seemed like a way safer bet. Real estate is a good asset, and people always want to rent it. So we never figured this would happen.”

But it did.

They paid about average for the unit – $780,000 – with 20% down and a mortgage for the rest, at 4.5%. So the monthly is $3,400. Condo fees, insurance and property tax come to $775. Subtracting Martha’s rent leaves them with negative cash flow of just over $1,300 a month.

“Plus we put down more than $150,000 to buy the place,” the unhappy owner says, “which we’re getting nothing on, obviouly, and we may actually have lost.”

That’s right. The unit has a current market value lower than the purchase price back in the frothy pre-con days of 2021. And not only is this older couple subsidizing the living costs of the young tenant, but Martha wants to pay less when her lease is up in October or, she says, she’ll move out. That’s bad news, with a rising vacancy rate locally and falling rents.

Obviously Thomas and wife regret buying the condo. They regret that hefty downpayment. They hate carrying the tenant. And they can’t sell it. There are current ten thousand other apartments on the resale market and over 16,000 new units available for buyers. The only hope of bailing out of monthly losses is to deeply discount the sale price – which may completely wipe out their equity.

This, as it turns out, is not an isolated case of two people making a dumb decision. Astonishingly, 82% of all similar investors with a mortgage on a rented condo last year were losing money. That was up from 77% who were in negative cash flow the year before – and a far cry from the 40% who were in the same boat in 2020. The big difference now is that these units are losing capital value at the same time they’re eating their owner’s liquid wealth.

If you have no sympathy, and believe people like Thomas are evil rentiers responsible for our housing crisis, think again. Wiithout investor, buildings wouldn’t get built. Units would not be available to lease. Vacancies would fall and rents rise. Now that those investors have fled, construction has ground to a virtual halt and economists forecast a true housing emergency is about four years away.

But wait. It gets worse.

It’s not just the radical right side of politics doing stupid, extreme things these days, the lefties are also setting their hair on fire and pursuing an agenda with one certain outcome: making things worse.

Take Olivia Chow, Toronto’s current boss. Days ago the city’s new ‘renoviction’ bylaw came into effect, designed to protect tenants from being evicted when a landlord needs to gut and reno a unit. The allegation is that owners do this merely to throw some paint around, then lease the unit to new tenants at a higher rate. Given a flood of new available units and lower rents, this is an illogical fear. But logic comes second to emotion, and all landlords (like Thomas) are viewed as the enemy.

What’s the bylaw say?

To renovate a unit in serious need of attention, a LL needs to file paperwork notifying the tenant and seek a licence form the city. That approval will only be granted if a building permit is received, plus an assessment done by an engineer or architect to confirm vacant possession is required for the work to be done. The fee is $700 per unit, plus the cost of the professional services.

There’s more. The owner must offer the tenant the right to move back in after the reno, at the same level of rent – regardless of the upgrade. The LL also must pay for the tenant’s accommodation elsewhere while the work is completed. Plus moving expenses. And if the tenant refuses to move back in, the LL has to pay them a severance equal to three months of rent. Plus $2,000 to help pay for moving.

Seriously.

The consequences are clear. Why would any owner renovate or improve a unit? Is this not an incentive to keep tenants in substandard conditions? Why invest in the property? Why would any mom-and-pop investor want to be in the rental business at all? Will this not just encourage large corporations, with deep pockets, to take a bigger market share? By driving investors out, won’t construction languish, fewer homes be built, and overall costs rise? How can the folks we elect to run the place be this thick?

“If we knew then what we know now,” says Thomas, “we would never in a lifetime have spent our money on this nightmare.

“But Martha’s happy. She won.”

About the picture: “Seems like some pooch pics are needed,” writes Randall. “Sending this pic of Roxy after a busy day in the water and running around enjoying the summer warmth, while she assumes her March Hare pose. Thanks to you and your team for the continued concise daily financial wisdom.  Enjoy the remaining summer days!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/08/04/the-nightmare-2/