Should I Sell My Condo or Keep It as a Rental?

One of the most common questions we receive from homeowners who own a condo and are planning to move (upsize) is whether they should sell their existing condo or keep it as a rental property while purchasing their next home.

Short Answer

There is no one-size-fits-all answer.

Keeping your condo as a rental can be an excellent long-term wealth-building strategy for some homeowners, but it isn't the right choice for everyone. The decision should be based on your financial situation, your long-term goals, your ability to comfortably carry both properties, and whether the condo makes sense as an investment on its own merits.

Some homeowners prefer to maintain liquidity and invest the proceeds from a sale elsewhere, whether in the stock market, exchange-traded funds (ETFs), mutual funds, their own business, or other opportunities.

It's also important to recognize that owning a rental property comes with responsibilities. Becoming a landlord means managing, either directly or through a property manager, the ongoing relationship with your tenant, addressing maintenance issues, ensuring the property remains safe and habitable, and responding to tenant requests in accordance with your obligations under Ontario's Residential Tenancies Act.

For some people, the landlord-tenant relationship is something they are comfortable with and even enjoy. Others prefer the simplicity and flexibility that comes from not owning an investment property. Neither approach is inherently right or wrong. The key is understanding what works best for your financial goals, lifestyle, and tolerance for risk and responsibility.

Why More Toronto Homeowners Are Asking This Question

As Toronto's condominium market has softened, more homeowners are considering whether it makes sense to keep their current property as a rental rather than sell.

The answer often depends on when the property was purchased. Some owners have built significant equity over time, while others who purchased closer to the peak of the market may find that selling today would generate little or no financial gain. In those situations, some homeowners choose to rent out the property, even if the rental income does not fully cover the monthly carrying costs, with the expectation that market conditions may improve over time. Many homeowners are also reluctant to sell if doing so means realizing little appreciation after years of ownership.

Other reasons homeowners choose to retain their properties include a desire to maintain a foothold in the Toronto real estate market, to keep the property for a child who may attend university in the city in the future, or because they have a long-term belief in Toronto real estate and view property ownership as part of their overall wealth-building strategy.

Questions to Ask Before Keeping Your Condo

Ask yourself these questions and see where the answers take you.

1. Can You Comfortably Afford Both Properties? Consider the cost of carrying the property like condo fees, property taxes, mortgage payments, insurance, unexpected repairs, real estate brokerage fees and vacancies. A rental property should not place unnecessary financial stress on your family. Before deciding to keep a condo, it's important to understand whether you could comfortably carry both properties if the unit remained vacant for a period of time.
   

2. Does The Condo Work As An Investment Property? Think about if it has the right location, building quality, how efficient is the floor plan. At this point, you have to think more as an investor, remove yourself of the subjective reasons why you own it and bought it the first place, and think if it will fit the needs of the market, if there is rental demand for the type of property, if it yields positive or negative cash flow. Location. Not every condo makes a good investment property. Some units attract strong tenant demand and rent quickly, while others may experience longer vacancy periods or lower rental returns.
   

3. Are You Comfortable Becoming A Landlord? Before deciding to keep your condo as a rental property, it's important to consider whether you're comfortable taking on the responsibilities of being a landlord. This may include screening tenants, responding to maintenance requests, dealing with unexpected repairs or emergencies, and understanding your legal obligations under Ontario's landlord-tenant legislation.

   Many homeowners underestimate the time and responsibility involved in managing a rental property. While some owners enjoy being landlords, others prefer not to deal with the ongoing obligations that come with owning an investment property.

   If you're considering this option, take some time to understand what being a landlord entails before making your decision.

   Related article: What Should Toronto Homeowners Know Before Becoming a Landlord?
   

4. Will Keeping The Condo Affect Your Ability To Purchase Your Next Home? Keeping your current condo as a rental property does not automatically mean you'll qualify to purchase another home. Your ability to do so will depend on several factors, including your income, the amount you still owe on your existing mortgage, the price of the property you intend to purchase, your down payment, and the amount of financing you'll require. Your lender will also evaluate whether, and to what extent, the anticipated rental income from your condo can be included when assessing your borrowing capacity. Every lender has its own underwriting guidelines, so the amount of rental income that can be used to qualify may vary. For this reason, we strongly recommend speaking with a mortgage professional early in the process. Understanding your borrowing capacity before you begin your home search allows you to evaluate your options with confidence and helps avoid surprises later on.

Is the Toronto Rental Market Viable?

Toronto continues to have an active rental market, especially for well-located condos near transit, employment centres, and established amenities. However, conditions are more balanced than in recent peak periods, and not every unit will rent quickly or at top pricing.

Recent data shows rents have softened year-over-year, with more supply and slightly higher vacancy. This means pricing, condition, and location matter more than ever.

For homeowners considering keeping their condo when purchasing a new home, the question is not just “Can I rent it?” It’s whether the rent you can realistically achieve supports your overall financial plan.

Avoid These Common Mistakes

• Keeping a property solely because selling feels emotionally difficult or because you are emotionally attached to it.

• Underestimating landlord responsibilities.

• Assuming the property will always be rented.

• Ignoring maintenance and vacancy costs.

• Failing to obtain professional tax advice

  
  

What We Tell Our Clients

We encourage clients to evaluate the property as an investment on its own merits rather than simply holding it in the hope that prices will recover. The question is not only whether prices may rise in the future, but whether owning the property continues to make financial and personal sense in the meantime.

If you're considering buying another home and aren't sure whether selling or keeping your current property as a rental is the better option, we'd be happy to help you evaluate both scenarios. Sometimes a conversation is all it takes to identify opportunities, understand the risks, and determine which approach best aligns with your financial goals and long-term plans.