Real estate agents who focus exclusively on rentals, can still earn a substantial income, especially in urban markets where rental demand is high and the rental market is frequently in flux. Unlike 10 years ago, the rental rate has increased substantially making the average commission for one agent around $1,200 per transaction.
While rental commissions are generally lower than those from sales (half-month rent plus HST), agents can still build a lucrative business or enhance their income through doing rentals by working with repeat & referred clients, and managing a higher volume of transactions.
Over the last decade, rental prices have experienced substantial fluctuations due to various factors, such as population growth, interest rates, inflation, immigration, and local economic conditions. Below is an example of how rental prices have changed between 2016-2024 for Toronto, one of the major Canadian cities.
2016-2020: Accelerated Growth
From 2016 onward, rent increases accelerated in Toronto and other major Canadian cities due to immigration, limited housing supply, and economic factors.
Toronto:
- 2016 Median Rent (1-Bedroom): $1,500
- 2020 Median Rent (1-Bedroom): $2,100
- Rent prices surged by 40% in Toronto over the 4 years.
2020-2024: Pandemic and Recovery
The COVID-19 pandemic caused a temporary dip in rental prices in major cities, with people moving out of downtowns and into suburbs. By 2024, however, rents rebounded drastically.
Toronto:
- 2020 Median Rent (1-Bedroom): $1,900
- 2024 Median Rent (1-Bedroom): $2,500
- A 31% increase over four years, as demand surged after people returned to the cities.
How this has affected commissions
The rise in rental prices has directly impacted real estate agents’ commissions and earning potential. As rent prices have increased, so has the total rental amount and thus the commission. For example:
2024 Rent: $2,500 per month → Commission (1 month): $2,500 (Co-op): $1250
With rent prices rising by 67% in the case of a Toronto 1-bedroom condo, an agent now earns significantly more per transaction than they did 10 years ago. If your goal is to earn $100,000, you would need to do 5- 7 rentals per month based on 1-bedroom condo. Fewer transactions are required if you are doing bigger units or properties.
Need expert guidance to navigate the world of Real Estate Rentals?
For new agents who want to focus on the rental business, the primary way to increase earnings is to increase transaction volume, build strong relationships with both landlords and tenants and capitalize on rising rental prices. By handling a large volume of rental transactions, agents can generate a consistent income, even if the commission per deal is lower than on sales.
At Cityscape, we equip you with an in-depth understanding of the rental process, empowering you to lay a solid foundation and succeed in the rental market. To find out more about our offerings and 100% commission packages contact us today.