Tenant Challenges in Toronto and Insights on CMHC Income Property Insurance

In this episode, Sandy MacKay begins with an introduction and delves into tenant issues in Toronto, exploring the challenges landlords face in this dynamic market. The discussion then introduces the episode's sponsor, CMHC Income Property insurance, and their role in supporting property owners. Sandy provides an overview of CMHC Income Property, discussing eligibility criteria and financing options available for investors seeking to expand their portfolios. The episode concludes with closing remarks, summarizing the key insights and thanking listeners for their continued support. This episode offers valuable perspectives on tenant management and financing opportunities in the multifamily real estate sector.

Episode Transcript

(00:00):
Did you know that in Toronto, nearly 100tenants have been participating in a rent

(00:04):
strike to fight for better living conditions?
Welcome to the Multifamily Real Estate InsightsPodcast.
I'm your host, Sandy MacKay.
Let's get right to it.
In a situation that's been developing formonths, residents at 1440 and 1442 Lawrence

(00:24):
Avenue West in Toronto are heading to theOntario Landlord and Tenant Board for a week of
hearings after a prolonged rent strike.
According to CityNews, tenants have beenwithholding rent for as long as eight to nine
months to push for improvements to their livingconditions, which they've been advocating for
over the past five years.
These tenants have been vocal about theirstruggles, citing issues such as water ponding,

(00:48):
fire damage, and pest infestations.
Soyab Kastura, a resident and participant inthe rent strike, spoke to CityNews about the
dire state of their apartments, saying, "We arestruggling so much in the last five years." He
highlighted ongoing problems with cockroaches,bed bugs, and mice that have made daily life

(01:10):
challenging for many families in the complex.
Bruno Dobrusin, an organizer with the YorkSouth-West Tenant Union, emphasized the
importance of landlords maintaining theirproperties.
He pointed out that tenants are not seekingfree rent but rather fair rent in response to
the conditions they face.

(01:30):
The property owners have made applications forabove-guideline rent increases, which exceed
the current annual cap of two point fivepercent, claiming these are necessary for
capital improvements.
As these hearings commence, there's hope thatthe Landlord and Tenant Board will take the
tenants' testimonies seriously and that theproperty owners will engage in meaningful

(01:51):
negotiations.
Dobrusin expressed optimism, noting that,"We’re actually also hoping that the landlord
is going to come down and negotiate and use theLandlord and Tenant Board as a space to do
that.
It has happened before."
Now, let's shift gears and discuss an importanttopic for investors in multifamily real

(02:11):
estate—mortgage loan insurance for rentalinvestments.
The Canada Mortgage and Housing Corporation, orCMHC, offers a product known as CMHC Income
Property, which is specifically designed for2-to-4-unit rental properties.
This insurance product opens up a range offinancing options for investors, making it

(02:32):
easier to secure funding when purchasing arental property.
CMHC Income Property provides flexible debtservice qualification options.
Borrowers can include up to fifty percent ofthe gross rental income from the subject
property in their debt service calculations.
Alternatively, lenders may use a net rentalincome approach, which considers gross rents

(02:52):
minus operating expenses.
This flexibility is especially beneficial forinvestors aiming to maximize their purchasing
power.
Eligible borrowers for this program includeCanadian citizens, permanent residents,
self-employed individuals, and corporateborrowers who provide a personal guarantee or
have a co-borrower.
The properties must be non-owner occupied, withtwo to four units, and located in Canada.

(03:17):
The maximum loan-to-value ratio for theseproperties is eighty percent, meaning investors
need to cover at least twenty percent of theproperty's value with their own funds.
Moreover, CMHC Income Property allows for amaximum amortization period of twenty-five
years, and the purchase price or lending valueof the property must be below one million

(03:40):
dollars.
Down payments can come from traditional sourceslike savings or the sale of another property,
and there are options for both single andprogress advances, depending on the improvement
costs involved.
Another key feature is the consideration ofcreditworthiness.
At least one borrower must have a minimumcredit score of six hundred, but CMHC may

(04:03):
consider alternative methods for establishingcreditworthiness for those without a
traditional credit history.
This inclusivity broadens the pool of potentialinvestors who can benefit from this insurance
product.
In terms of premium rates, they vary dependingon the loan-to-value ratio.
For instance, if the ratio is up to sixty-fivepercent, the premium is one point four five

(04:26):
percent of the total loan amount.
If it falls between sixty-five point zero onepercent and seventy-five percent, the premium
increases to two percent.
For ratios between seventy-five point zero onepercent and eighty percent, the premium is two
point nine percent.
This product not only helps investors securefinancing but also supports them in making

(04:48):
smart homebuying choices with a variety offinancial planning tools available from CMHC.
It's a fantastic resource for anyone looking toinvest in smaller rental properties, offering
both financial flexibility and peace of mind.
Thank you for listening to the Multifamily RealEstate Insights Podcast.
I'm your host, Sandy MacKay.

(05:08):
See you on the next one.