Per month cheaper to rent than to carry a $500K Ontario home. This is the math driving rental demand.
PV, Mit & Jeff
The honest math behind owning a $500K home versus renting a 1 bed in Ontario today.
A question we get on almost every prospect call: "Why are people still renting? Shouldn't they be buying?"
The answer lives in two numbers a lot of investors have not run side by side recently. Once you see them, the demand profile for purpose built rental in Ontario stops being a thesis and starts being arithmetic.
Here is the same household, the same neighbourhood, the same square footage. Two different roofs over their head.
Monthly $3,770
Monthly $1,800
Owning costs the same household roughly $1,970 more every month. That is $23,640 a year, after tax, that the renter keeps in their pocket.
And that is before you factor in the $25,000 down payment, land transfer tax, lawyer fees, the new roof in year seven, and the furnace that goes out the week of Christmas.
The renter writes one cheque, hands the landlord first and last, and is done. The owner writes a $25K cheque just to get the keys, then signs up for $3,770 a month for 25 years.
For a generation that watched home prices double in a decade and then stall, who has student debt, who needs job mobility, and who has a phone calculator, this is not a hard decision. They are renting.
432 Units · 25 Storey Purpose Built Rental · London, ON
$100K Minimum · Cash Only · Accredited / Existing FC Investors
Targeted Return: 20% to 24% Annualized
Today's market rent in London for a comparable 1 bed sits at roughly $1,800.
Wellington Towers will lease 90% of its 432 units at $1,500. The remaining 10% will lease at $980 as deeply affordable units.
So today, before we even break ground, we are already pricing $300 below market. That is the leasing strategy in one line.
Construction completes in 2030. Apply even a conservative 3% annual rent growth to today's $1,800 market rent and you land at roughly $2,025 a month by the time we hand keys to the first tenant.
Wellington Towers leases at $1,500. That is more than $525 a month below the projected 2030 market. Roughly 26% below market on day one of operations.
The gap does not stay flat. It widens. Every year between now and lease up makes our pricing more attractive relative to the market we are walking into.
The building does not need to fight for tenants. The math does the work.
This is also why CMHC underwrites this kind of project at 95% loan to cost. The federal lender is not betting on a hot market. They are looking at the same numbers in this email and concluding the building leases up fast. So are we.
8 Stabilized Apartment Buildings · Southwestern Ontario
$10K Minimum · RRSP / TFSA / RESP / LIRA Eligible
Targeted Return: 15% Annualized
Current unit price: $13.40
The public is choosing the simpler option. First and last, walk away in 60 days, no $25K down payment, no furnace, no roof.
We are choosing to be on the other side of that decision. Building purpose built rental at scale, in markets where the rent versus own gap keeps widening, with the federal lender funding most of the build cost.
One side of the equation pays $1,800 a month and keeps moving. The other side underwrites the building and collects the rent for the next 30 years. Pick your seat.
To your success,
PV, Mit & Jeff
P.S. The $1,500 rent point on Wellington Towers is not a discount. It is a velocity strategy. Below market pricing leases the building faster, stabilizes NOI sooner, and gets the project to its exit valuation on schedule. Faster lease up is one of the biggest single levers on a development return.
