A Toronto condo developer is buying hundreds of detached houses in Ontario, with the plan of renting them and profiting on the housing crisis ripping across the country.
Core Development Group Ltd. is building a large-scale single-family home rental operation, an unproven business model in Canada, where the market is fragmented and individual investors lease a small number of their own properties for income.
Institutional house rentals have become highly lucrative in the United States, with private-equity firms, pension funds and big companies throwing billions of dollars into the asset class. In Canada, deep-pocketed investors, as well as real estate investment trusts, have already acquired hundreds of apartment buildings to tap into the strong rental demand but have not moved into rental houses.
Core founder Corey Hawtin and executive vice-president Faran Latafat questioned why there wasn’t a similar business in Canada, which has had a rental vacancy rate below 3 per cent since the turn of the century.
“We were trying to answer the question: Why is nobody doing this in Canada? We could not come up with an objective answer to that. In Canada, it works as well or better than the U.S.,” said Ms. Latafat, Core’s president of single-family development.
Core’s main business is condo development, and it has 14 projects in the Toronto region. Last fall, Mr. Hawtin raised $250-million from investors to buy approximately 400 properties, add basement apartments and turn the houses into two rental units.