^^^^
There was a great article in the Globe and Mail recently about skyrocketing rents in Toronto and how they are forcing the closing of so many really great restaurants. Many of us have had the experience of phoning our favourite little restaurant only to find that they shuttered recently. Sometimes, it's that the owners weren't really good business people (too many freeloaders, not keeping a watch on the till, worrying too much about the kitchen and not enough about up front), but many times of late it's been that the lease comes due.
.......
The restauranteurs could move to less happening areas, but how far out is too far out? I'm not going to drive up to Rexdale to have dinner any time soon. I can think of a few less happening areas in Toronto that are still urban - the junction, Annette Street, Keele and St. Claire, Dupont Street, Davenport, Parliament street'ish, Mimico etc. etc. but even there, the rent is very high.
Great conversation!
My buddy owns a building on Yonge near Lawrence that has a hardware store and a rental unit above. Been in the family for 50+ years. He's given me insight to the landlord problems:
- Every 3-4 months some idiot will graffiti the side of the building or the garage. The problem is finding someone that can blast clean the brick within the 72 hour limit before the city imposes a fine. It costs ~$500-1K each time.
- He was forced by his insurance company to upgrade the electrical service in the store and rental unit. Total bill was >$20K as all the wiring had to be replaced, drywall fixed, new fixtures, etc.).
- He wanted to make some improvements (better doors, better windows, ramp for wheelchair into the store), but when he applied for the permits, the city said he had to make other improvements (improved fire escape, wider main door into the rental unit, mandatory wired fire detectors, stairs widened, etc.) The extra cost was ~$20K on top of the $25K he had budgeted for the improvements.
- At least once a month an idiot will put locktite into the main door's locks (very common problem). Few hundred bucks for the new lock and keys, but it's close to $1K a year.
- At the side of the building is a big asphalt pad that ~3 cars can use if visiting the store. It was in bad shape so the city told him he had to replace it (it was a risk to pedestrians). It was a few thousand to replace, but the city then told him he had to have a yearly permit to allow parking on the pad. Another city tax grab.
- Several times over the years when the rental property tenant leave, they stop paying and he spends 3-4 months of effort and expense kicking them out, then he has the cost of the damage they left, replacing the plumbing fixtures they stole and repainting and cleaning the unit. He figured the last tenant cost him $6K in lost rent and $3K in damages and repainting.
- 10 years ago an old oil furnace tank was discovered buried in the backyard of his building. It cost him $80K to remove and clean-up (oil was found in the soil of the properties around him - very big deal). He's still paying the loan off.
- He's putting off a furnace and air conditioning replacement.
- Every year his taxes go up more than inflation.
- Every year he has to familiarize himself with the latest bylaws and make sure he's in compliance
He claims he does make some money at the end of each year, but factor in his time, he's working for minimum wage. The real value is in the building, but that will eventually be taxed and there's no guarantees.
