Trying to decide on a market

Toronto, Canada
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Trying to decide on a market

Account Closed
Handyman · Toronto, ON · Member since 2023 · 4 posts · 2 votes

Hello Investors,

I am a carpenter working full time in Toronto I have set my goals high to become a successful real estate investor and am willing to put in all the work it takes to get there.

I have spent the last few years learning and planning it out and I would like to take action this year and buy my first property. My plan is to buy a duplex or triplex that I can cashflow through rentals and add value then ultimately refinance and buy more (brrrr method).

As of right now I am working through the process of deciding on which market I want to invest in. I've gone to a few meetups and it has swayed my decision around a bit. My price range is 300k so my hometown Toronto is out of the question. What I am looking at is. 

1) Small town Ontario. Hamilton, Brantford, Sudbury, Welland or similar towns. I like the idea of investing in these parts best because while it is a commute I will still be able to visit the property when necessary. My biggest concern is how many people have told me the struggles investing in Ontario because of tenant-friendly laws. I've been warned that tenants can go months without paying rent and a situation like that would make it hard for me to keep up with payments.

2) New Brunswick. After going to afew REI meetups with a group I am in I have noticed a common trend that many investors love New Brunswick. Mostly because landlords have more power and freedom to raise rents and get rid of bad tenants much unlike Ontario. Some of these investors have bought these properties without even visiting them and claim it is going very well for them. I have been strongly encouraged to invest in here. The idea sounds great and I am considering it. I have never been and I don't know much else about NB but I am currently doing my research. Any investors in that market please reach out!

3) Alberta. Once again I have only heard good things about this market yet I don't know much about it myself. I will be doing my research but any advice will be greatly appreciated!

I am still new and learning and there is more research to be done on my part but any insight will be greatly impactful!

2Reply
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Paul Sverdlin
Rental Property Investor · Ontario + Ohio · Member since 2018 · 82 posts · 53 votes
2y

Hey Matt. Your question is so targetted that only an expert in ON, NB and AB markets can answer it, and even then it would only be their own experience. Hence it seems rather quiet in this thread.

As an ON investor for over a decade I can tell you that tenant nightmares could be real, and yet a lot depends on how you screen and treat those tenants. If you condense the question it seems to be a decision around total return vs. total risk. 

The biggest returns so far in Canada had been from appreciation, not so much from rents. Appreciation is great in Ontario and has been great lately in AB. While cashflow may be good in NB, I doubt it will match the value growth in our biggest growth markets.

The risk is in tenants not paying rent, and the pain in evicting them. That's where ON would be tougher than AB. However, this risk needs to be weighted against other risks of managing properties remotely since doing it from ON has its own issues (can't do even smallest of repairs on your own, can't check on the condition of the units, can't even show them to tenants in person to evaluate those tenants when you are first renting to them, etc). All of those remote management issues do add up and cost $$$ in long run.

Imagine a bad scenario: ON tenants stop paying, refuse to leave, it takes 10 months to evict them and they trash the place. Say rent was $3000/month. So you are out of pocket $30k + another $30k for renovations. While $60k is a lot, can you live with it if your property goes up in value by hundreds of thousands over the course of many years? Mind you, that's a very bad scenario. And it can also happen in AB or anywhere else in the world, although the likelihood may be a bit higher in ON. In 12 years that I managed my own rentals in ON there had been a few instances where I had to deal with problematic tenants and each time we resolved our issues without involving LTB. None cost me more than $5k. Meanwhile a coat of paint in-between tenants that I could have put on myself in my home market would easily cost me $5k in a remote market since I simply can't go there to paint the unit and have to hire a contractor instead. And that's every 3-4 years when tenants move out.

Hope this gives you some food for thought. Happy to connect if you need to discuss. 

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  • Cody NeustaedterPro Member
    Real Estate Agent · Winnipeg MB, Canada · Member since 2021 · 108 posts · 34 votes
    2y

    Hi Matt!

    With any market you can have either good or really bad tenants. Do a good job screening and consider the pros and cons of waiting an extra month of not having tenants vs the risk of having tenants who trash the place or refuse to pay rent for months.

    I invest in my hometown here in Winnipeg and Manitoba has very friendly tenant laws. With that being said, lots of people choose to rent and it can be very easy to find qualified renters, especially when you buy nicer properties in the nicer neighborhoods. 

    If you are interested in Winnipeg feel free to PM me. 

    204-227-5081
    2Reply
  • Paul Sverdlin
    Rental Property Investor · Ontario + Ohio · Member since 2018 · 82 posts · 53 votes
    2y

    Hey Matt. Your question is so targetted that only an expert in ON, NB and AB markets can answer it, and even then it would only be their own experience. Hence it seems rather quiet in this thread.

    As an ON investor for over a decade I can tell you that tenant nightmares could be real, and yet a lot depends on how you screen and treat those tenants. If you condense the question it seems to be a decision around total return vs. total risk. 

    The biggest returns so far in Canada had been from appreciation, not so much from rents. Appreciation is great in Ontario and has been great lately in AB. While cashflow may be good in NB, I doubt it will match the value growth in our biggest growth markets.

    The risk is in tenants not paying rent, and the pain in evicting them. That's where ON would be tougher than AB. However, this risk needs to be weighted against other risks of managing properties remotely since doing it from ON has its own issues (can't do even smallest of repairs on your own, can't check on the condition of the units, can't even show them to tenants in person to evaluate those tenants when you are first renting to them, etc). All of those remote management issues do add up and cost $$$ in long run.

    Imagine a bad scenario: ON tenants stop paying, refuse to leave, it takes 10 months to evict them and they trash the place. Say rent was $3000/month. So you are out of pocket $30k + another $30k for renovations. While $60k is a lot, can you live with it if your property goes up in value by hundreds of thousands over the course of many years? Mind you, that's a very bad scenario. And it can also happen in AB or anywhere else in the world, although the likelihood may be a bit higher in ON. In 12 years that I managed my own rentals in ON there had been a few instances where I had to deal with problematic tenants and each time we resolved our issues without involving LTB. None cost me more than $5k. Meanwhile a coat of paint in-between tenants that I could have put on myself in my home market would easily cost me $5k in a remote market since I simply can't go there to paint the unit and have to hire a contractor instead. And that's every 3-4 years when tenants move out.

    Hope this gives you some food for thought. Happy to connect if you need to discuss. 

    3Reply
  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    2y
    Quote from @Account Closed:

    Hello Investors,

    I am a carpenter working full time in Toronto I have set my goals high to become a successful real estate investor and am willing to put in all the work it takes to get there.

    I have spent the last few years learning and planning it out and I would like to take action this year and buy my first property. My plan is to buy a duplex or triplex that I can cashflow through rentals and add value then ultimately refinance and buy more (brrrr method).

    As of right now I am working through the process of deciding on which market I want to invest in. I've gone to a few meetups and it has swayed my decision around a bit. My price range is 300k so my hometown Toronto is out of the question. What I am looking at is. 

    1) Small town Ontario. Hamilton, Brantford, Sudbury, Welland or similar towns. I like the idea of investing in these parts best because while it is a commute I will still be able to visit the property when necessary. My biggest concern is how many people have told me the struggles investing in Ontario because of tenant-friendly laws. I've been warned that tenants can go months without paying rent and a situation like that would make it hard for me to keep up with payments.

    2) New Brunswick. After going to afew REI meetups with a group I am in I have noticed a common trend that many investors love New Brunswick. Mostly because landlords have more power and freedom to raise rents and get rid of bad tenants much unlike Ontario. Some of these investors have bought these properties without even visiting them and claim it is going very well for them. I have been strongly encouraged to invest in here. The idea sounds great and I am considering it. I have never been and I don't know much else about NB but I am currently doing my research. Any investors in that market please reach out!

    3) Alberta. Once again I have only heard good things about this market yet I don't know much about it myself. I will be doing my research but any advice will be greatly appreciated!

    I am still new and learning and there is more research to be done on my part but any insight will be greatly impactful!


     Welland is a good choice. Lots of development in the area as the city is growing

    1Reply
  • Amadeusz Bialy
    Rental Property Investor · Toronto Ontario · Member since 2024 · 15 posts · 5 votes
    2y

    Hey Matt,

    First and foremost im excited to hear you have decided to delve into the world of investing in rentals. As an investor focused mortgage agent i'd like to provide some insight that may help you decide which market to invest in. When you're starting out, the most important thing is cashflow. That's because cashflow is what can help you scale when you are starting out, and it's also what saves your butt during tough economic times. 

    I was able to scale to 4 properties on an entry level income because i was purchasing properties in Sudbury which provided me a high rent relative to the purchase price & mortgage amount. I was able to BRRRR four properties there and now i am slowly deciding to pivot to tackle more appreciation plays.

    If your first rental is an appreciation play and there simply is not enough rental income to offset your expenses then you may run into financing issues after your first property. There are specific lenders where you can get up to 10 properties as long as they hit a certain rental income to debt ratio.

    Should you want some help planning out how to get into a rental and scale your portfolio, or hear about my investment journey in Sudbury don't hesitate to reach out!

    3Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 695 votes
    2y

    @Account Closed

    You should invest where you feel you have a competitive advantage. I invest in Jacksonville FL because my old job would fly me there multiple times a year so I learned the city over time.

    [email protected]
    BookkeepingRE - Bookkeeping for Real Estate & Service-Based Businesses58 Reviews
    WebsiteView Page
    2Reply
  • Account Closed
    Toronto, Ontario · Member since 2023 · 12 posts · 10 votes
    2y

    Hi Matt,

    Lots of opportunities. Good luck.

    James

    1Reply
  • Chinyere O.
    Member since 2019 · 7 posts · 0 votes
    2y
    Quote from @Hai Loc:
    Quote from @Account Closed:

    Hello Investors,

    I am a carpenter working full time in Toronto I have set my goals high to become a successful real estate investor and am willing to put in all the work it takes to get there.

    I have spent the last few years learning and planning it out and I would like to take action this year and buy my first property. My plan is to buy a duplex or triplex that I can cashflow through rentals and add value then ultimately refinance and buy more (brrrr method).

    As of right now I am working through the process of deciding on which market I want to invest in. I've gone to a few meetups and it has swayed my decision around a bit. My price range is 300k so my hometown Toronto is out of the question. What I am looking at is. 

    1) Small town Ontario. Hamilton, Brantford, Sudbury, Welland or similar towns. I like the idea of investing in these parts best because while it is a commute I will still be able to visit the property when necessary. My biggest concern is how many people have told me the struggles investing in Ontario because of tenant-friendly laws. I've been warned that tenants can go months without paying rent and a situation like that would make it hard for me to keep up with payments.

    2) New Brunswick. After going to afew REI meetups with a group I am in I have noticed a common trend that many investors love New Brunswick. Mostly because landlords have more power and freedom to raise rents and get rid of bad tenants much unlike Ontario. Some of these investors have bought these properties without even visiting them and claim it is going very well for them. I have been strongly encouraged to invest in here. The idea sounds great and I am considering it. I have never been and I don't know much else about NB but I am currently doing my research. Any investors in that market please reach out!

    3) Alberta. Once again I have only heard good things about this market yet I don't know much about it myself. I will be doing my research but any advice will be greatly appreciated!

    I am still new and learning and there is more research to be done on my part but any insight will be greatly impactful!


     Welland is a good choice. Lots of development in the area as the city is growing


     Do you have property in Welland?

    0Reply
  • Amadeusz Bialy
    Rental Property Investor · Toronto Ontario · Member since 2024 · 15 posts · 5 votes
    2y
    Quote from @Chinyere O.:
    Quote from @Hai Loc:
    Quote from @Account Closed:

    Hello Investors,

    I am a carpenter working full time in Toronto I have set my goals high to become a successful real estate investor and am willing to put in all the work it takes to get there.

    I have spent the last few years learning and planning it out and I would like to take action this year and buy my first property. My plan is to buy a duplex or triplex that I can cashflow through rentals and add value then ultimately refinance and buy more (brrrr method).

    As of right now I am working through the process of deciding on which market I want to invest in. I've gone to a few meetups and it has swayed my decision around a bit. My price range is 300k so my hometown Toronto is out of the question. What I am looking at is. 

    1) Small town Ontario. Hamilton, Brantford, Sudbury, Welland or similar towns. I like the idea of investing in these parts best because while it is a commute I will still be able to visit the property when necessary. My biggest concern is how many people have told me the struggles investing in Ontario because of tenant-friendly laws. I've been warned that tenants can go months without paying rent and a situation like that would make it hard for me to keep up with payments.

    2) New Brunswick. After going to afew REI meetups with a group I am in I have noticed a common trend that many investors love New Brunswick. Mostly because landlords have more power and freedom to raise rents and get rid of bad tenants much unlike Ontario. Some of these investors have bought these properties without even visiting them and claim it is going very well for them. I have been strongly encouraged to invest in here. The idea sounds great and I am considering it. I have never been and I don't know much else about NB but I am currently doing my research. Any investors in that market please reach out!

    3) Alberta. Once again I have only heard good things about this market yet I don't know much about it myself. I will be doing my research but any advice will be greatly appreciated!

    I am still new and learning and there is more research to be done on my part but any insight will be greatly impactful!


     Welland is a good choice. Lots of development in the area as the city is growing


     Do you have property in Welland?


     I know many investors in Welland, how can i help?

    0Reply
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