The Executive Rentals Market
In our opinion, buying any home should be looked at as an investment. Buying a good property in a good location for both future appreciation and as a way to generate some level of income. Nowadays, it is a luxury to own a home in the country or in expensive cities like Oakville or Toronto. If you are fortunate enough to already own such a property, or have plans to purchase one, the executive rentals market may be just the place to supplement some of those mortgage payments.
What is an Executive Rental Property?
Simply put, this can be either a short- or long-term lease on a high-end property, offered for rent at a high price.
Properties of this nature have all the bells and whistles. The house itself would need to be beautifully updated from floor to ceiling (no IKEA cabinetry here). It would need to offer high-end appliances throughout as well. On short-term executive leases the house is furnished (and can be the case with long-term as well). Modern, Luxurious and high-end furniture is a staple in these properties.
The home or building should offer multiple amenities to the renter – such as a spa or gym facility of some sort.
Executive Renters want that homey feel with all the necessities and ease of staying in a hotel.
The Market
This market is a small niche section of the rental market in Canada. Generally, we would not recommend going out and buying a $1,000,000 property strictly as an investment. Usually owners of these types of properties purchase them as residences for themselves and then rent out a section of the home or property.
Who is your likely client base?
Your clientele for executive rentals consists of business professionals, foreign university students, wealthy families and people looking for short-term rentals for vacation rentals or events (think wedding parties, girls’ weekends and so forth).
Professional athletes are another client base for luxury rentals – but this is seasonal and very location dependent. For example, homes were rented out during the Pan-Am games held in and around Toront as are many home rented in Port Dalhousie during the Royal Henley Regatta.
The Pricing
What is executive / high rent?
It will range depending on where the home is located. Naturally, the closer you are to Toronto the more expensive rents seem to get. On a regular “long-term” lease (e.g. a 1 year term), we have seen ranges from $3,000 – $12,000 / month, sometimes more.
When it comes to high-end, short-term rentals, we have seen a range of $5,000 – $15,000 / month and again sometimes more than this. It is unclear, however, how often or how long these short-term properties are rented for.
The higher priced rentals are definitely an anomaly. People renting properties for this amount aren’t your every day average tenant and finding executive renters can be a challenge, especially if you are not in the right location.
If you would like to see some examples or do some research on executive rentals around Ontario check out these links:
- https://condos.ca/search/condos-for-rent
- http://torontoluxuryrentals.com
- https://www.airbnb.ca/s/Ontario/ – You will have to play with the filters on this one to see the cost of short-term rentals in the different areas in Ontario.
- There are also many examples and comparables that can be shared with you from real estate boards upon request.
The House
It goes without saying, but I’ll mention it anyway; executive properties need to offer something special to clients. This is in regard to the home, the location and the amenities offered in or nearby the home. Again, these are not your average tenants and your house can not be an average home.
As previously mentioned, the more rent you are hoping to get the more extraordinary the home or condo will need to be. And still there is no guarantee of getting that peak level rent. From ceiling to floor, luxury and style is a must in these homes.
The look, size and feel of the home are all going to play a factor in what your house is worth to tenants in the executive rental market.
The Location
The location will range depending on your target market. If you are looking for single executive professionals, a penthouse unit in Yorkville would likely be what they are looking for. On the other hand, an executive professional with a family may wish to live on a beautiful treed lot somewhere in the Halton Hills region.
If you are catering to travelling professionals, wealthy vacationers or wedding parties, having a home with a view will go a long way. Your view might be a winery, lake or escarpments views. Having this scenic option for executive clients is ideal.
The Amenities
Amenities in the home (or close to the home) should include a gym facility, spa facility of some sort, a swimming pool or hot tub and of course laundry facilities as well. Anything that adds vale to your clients stay is key.
Relative closeness to restaurants, shopping and recreational activities are all a plus as well.
Advice
When is it the right investment?
Homes and condos of the caliber described above do not come cheap, not to buy and not to keep up on a monthly basis. We would never recommend buying an expensive home as an investment with the hopes of renting it out for a large amount of money – this is definitely not a wise strategy.
I do like what I am seeing on the various real estate boards and believe that the executive rentals market is gaining traction, but still it remains a niche and somewhat risky market.
Who might this model work for best?
- Someone who already owns a home in a high-end or beautiful area. It may be that they are able to rent out a portion of the home, are moving, travelling for an extended period or perhaps are looking to downsize their primary residence while still holding on to the property for income purposes.
- If you are someone with experience in the AirBnB market, you may be more able and more willing to take a risk on a higher priced property. Again, I would not recommend the purchase of a $1,000,000 property in the hopes of renting it out in the executive market sector (be it for vacations or short-term rentals).
- Someone who is buying a property for themselves can consider living in the property while renting out another section of the home in the executive / luxury or AirBnB rental market sector.
There is definitely money to be made in the executive / luxury rental market. However, there is a right way to do it and a wrong way to do it and doing it incorrectly could be extremely costly to you. Always seek advice from a professional before tackling this market niche!
If you have questions about the executive rental market or would like to see currently leased executive rentals in Ontario, shoot us an email.
