Toronto, Ontario · Member since 2017 · 31 posts · 1 vote
Hello,
My name is Manvir and I'm brand new to the world of real estate. To be honest, I never considered RE as a career path but recently I discovered some videos looking at analyzing rental properties and for some reason I was fascinated. I've always been a numbers guy so it just got me hooked. I've been looking at rental properties in Ontario (within a few hours drive of Toronto) and have found some decent options. However, given the crazy expensive market here, the initial investment requirements are pretty high.
I was wondering if there are other investors here from Ontario and if they could offer any wisdom. I'm just looking for general advice. How does our market compare with the US? Are the hurdles to entering the real estate market similar? etc
There are a lot of Ontario investors here, many in your area and a solid turnout in SW Ontario with a few scattered north.
Buy and hold cash flowing real estate in Toronto is not easy business and requires deep pockets from what I have heard on these forums. Past KW things get better.
If you are going to landlord you NEED to print off a copy of the RTA and use it to learn how horrible tenants abuse it.
There are a lot of Ontario investors here, many in your area and a solid turnout in SW Ontario with a few scattered north.
Buy and hold cash flowing real estate in Toronto is not easy business and requires deep pockets from what I have heard on these forums. Past KW things get better.
If you are going to landlord you NEED to print off a copy of the RTA and use it to learn how horrible tenants abuse it.
Grouping the US as a whole to compare to doesn't really work. Investing in the GTA can be similar to investing in certain cities in the US that are more expensive. The BP podcast often mentions that there are affordable markets within a couple hours drive of every expensive city - and they're correct.
Some investors do very well investing in Toronto. If you want to invest for cash flow, you usually need to leave the city, but it is definitely possible.
@Matt Geerts I don't think I'm planning on looking strictly in Toronto. I was thinking maybe Brampton, Mississauga, Oakville etc. Maybe even all the way down in Simcoe area. I'm mostly interested in buy and hold properties that generate good cash flow (I'm not super concerned about appreciation at this point).
I've seen some multifamily properties that are affordable and generally rented by low income individuals. How do those units fare as rentals? Does government subsidies help keep the rent more consistent? How are they as tenants?
@Luc Boiron What kind of areas would you recommend I look at for good cash flow? I would love to come out to your meetup but unfortunately I have work tonight. How often do you have these meetups? I would love to come to the next one.
Thank you guys for replying. I'm glad I'm not alone up in the North. :)
Luc Boiron
Hi Luc,
I am also looking into buy and hold investments within the GTA or a few hours from it and as Manvir G. mentioned, its the cash flow that I am more concerned about initially.
How often do you organize these meets? I would love to come down and join in on the conversation.
Thanks in advance!
@Manvir G. I wouldn't classify Mississauga, Brampton and Oakville as low cost cities. PM and we can talk about London and more importantly the surrounding area (because Toronto people are paying insane over-asking prices in London itself and driving up costs right now).
Government does not subsidize rentals in Ontario (except a specific niche that you will not be investing in). In fact the government does everything that it can to ensure that the lowest common denominator can screw landlords and have complete protection from any litigation. A welfare or disability recipient can stop paying you, enjoy 3-24 months of rent-free living and be protected from a court order to ever pay you back. Ridiculous? Unreasonable? Insane? Call your local MPP. If someone on government assistance says your rent is "guaranteed" because it goes directly to you from the gov, that is a huge red flag because they are trying to trick you - they can redirect that check back to them with a phone call and begin the landlord-screwing process.
Seriously, go find the RTA, print it off and read it 3 times. Then read it one paragraph at a time and brainstorm ways that a tenant can use that paragraph to cost you money, and think of how you can mitigate that risk.
Yes, this is all sounding sensationalist, until it happens to you. Google "Nina Willis" and you'll understand.
@Manvir G. I am primarily a buy and hold investor, been doing it for about 8 years in Brampton. Unless you have deep pockets it would be hard for you to get a rental that cash flows well in Brampton/sauga, in today's market.
I wouldn't go and read the RTA word for word as stated in this thread. Just familiarize yourself with it and the LTB (Landlord & Tenant Board) process/forms. I've been there a few times and to small claims for recovering unpaid rent, its a lengthy process but I did it more for the experience and knowledge, and justice than the money. Learn about managing property, how you can maximize cash flow by charging market rents, etc.
In terms of your first deal, if you have the capital (approx 100-150k) then you can invest that in Brampton/mississauga, but it would be more for appreciation than cashflow since you wouldn't cashflow by much. Look at outer markets (St. Catharines, Niagara Falls, etc.) you can get a better ROI for your money. Let me know if you have any questions or need help.
I am in Ontario and have some student rentals in KW, Hamilton and London as well as other provinces in Canada. Please feel free to PM me and I am willing to share my connections. Another point that is there are other types of investments that generate cash flow that you can look at as well. REI is not limited only to buying and holding on properties, though it's the one we commonly think off. I think it depends on what your goals are and what strategy you want to use. I do quite a bit of private lending on the side as well which works great for me as well.
@Matt Geerts Wow I didn't realize the RTA was that disadvantageous to landlords. I'll look it over carefully, thank you for the advice.
@Daljeet S. Hi Daljeet. Thank you for your reply. Given the market rates I am currently looking farther south of the GTA, particularly in the St. Catharines, Niagara Falls, KW, London, Windsor areas. The buy and hold investments that you've done so far, have they all been SFH? Or multiplexes mixed in as well? I would love to message you privately and get your thoughts on some opportunities if you wouldn't mind.
@Roshni Patel Hi Roshni, thank you for replying. As I mentioned above, I'm definitely interested in KW, London and even Windsor. I'll PM you to discuss further.
I don't have any SHF's, own a few duplexes (Brampton/London), you cash flow much better, if it comes to adding a basement so be it. Sure, PM with any questions, I don't mind at all.
@Daljeet S. don't read the RTA, just learn how to manage? Those are incompatible statements. You can't learn to do a thing without reading the rules for that thing. The RTA is not a large document, so if you want to operate legally then take two hours and read it. I would not risk my entire livelihood on being too lazy to spend two hours reading a simple set of rules for a business I plan to enter.
@Matt Geerts Its stupidity to brainstorm ways that a tenant can use a paragraph of the RTA to screw you over for a new investor. Here's a link to the RTA: https://www.ontario.ca/laws/statute/06r17 its not 1-2 pages, its pretty long and for someone to tell a newbie investor looking for a place to invest, to read and memorize the RTA instead of helping them with strategies on doing JV, raising capital, etc. for their first deal is not good advice.
You sound like an experienced investor so it may work for you to do this, whereas it may not for someone new. Anyways, not going to waste my time arguing over this.
I didn't say it was 1-2 pages, I said it takes two hours to read it. It will be a significant time investment (10 hours total) to read it three times, and then analyze it for safety. Ten hours of my time is not worth as much as a 25k fine, or a 100k rehab and rent arrears caused by a person who can't be sued to recover it.
Perhaps shooting from the hip has worked for you so far, but you can be in violation of the Act even before you show the property for the first time and you're immediately vulnerable to predatory tenants.
If some due diligence on a new business is too much for you, I would suggest you invest in a REIT and let the professionals who know the rules take care of your money.
And no, I am not an experienced landlord, I am educated one.
It is akin to buckling your seatbelt and checking your blind spots before you drive.
I also didn't suggest NOT learning about JVs and other methods of getting into investing.
@Manvir G.@Gurpreet Sehmbi Brampton, Mississauga, etc are a bit too close to Toronto to cash flow well, though of course it is possible. If you are really investing for cash flow, you may want to go a little further. I would recommend areas like Brantford, Cambridge, Orillia, Peterborough.
I'll be holding the meetup once a month, so definitely come to the next one. Last night was the first one and we had a great group of investors come out.
I think I understand the need to familiarize myself with the RTA, so I'll definitely read it over. Thank you for the advice.
@Luc Boiron Is there an emailing list or sign up so that I can be notified when the next meeting is being held? What kind of discussions take place at these meetings? Do I need to prepare something to attend?
You don't need to prepare anything to come, but bring some questions if you want to ask anything. It's just people talking about real estate, the market, deals that they have done, etc.
I've been investing in the Niagara Region for 13 years now and I've always found it to be a good place to find low-cost property with good cash flow. The way the market has been lately though things are changing pretty quickly and property values are going up at an exponential rate, but if you look at it from the perspective of investing it's still one of the better areas in all of Ontario to invest.
Luc Boiron Sorry I meant that although I'm from Brampton, I am interested in investing in areas outside of the GTA as you mentioned such as Orillia, Niagara, etc.
It will take extensive research to find but I am confident there are deals out there that can cash flow for a decent amount.
@Dave Vogt Hi Dave. I'm looking in the Niagara region now too thanks to comments by previous posters as well as what I've read in other parts of this site. If you wouldn't mind, could you share what you think is an average cash on cash return in those parts?
The legal non conforming 4 plex we just put on the market sold for over asking. It was listed at 289,900 and had a 10.2% cap rate. The tenants paid a lot of the utilities on this one which made it cash flow better...something I always strive to get.
We've often put down 30% on similar properties...that's a 34% cash on cash. The best part is the steadily climbing prices right now that just build your equity making the investment that much better.
This rental having gone over asking still had a 9+% cap rate!!
Lets not forget a little sweat equity. There are tons of poorly managed properties...well at least there was at one time. They are getting harder to find as people start coming our way and buying up these properties.
A savvy investor can do well down here. It's been great for us and even my broker is buying up bigger multi units now. It just makes good sense.
I wouldn't give out an average cash on cash. In my opinion there is too much of a range that depends so much on your skill level, ability to repair the building, the amount you put down, etc...Gone soon will be the days of 20% down as lenders tighten up the lending criteria, but for those who know what their doing and have the equity to play with, it's a great area to invest.
@Manvir G. as I said, I'd be happy to talk to you about my area, but I'd also recommend listening to @Dave Vogt about Niagara. The region has already built up a lot, so you're not going to get the bulk of it, but I still LOVE that area.
It was only a few years ago that as you drove down the QEW all you saw on either side was contractor stores - granite, tile, excavation machines, carpet, engineering, etc etc etc. Now you see thousands of houses. I always knew it was an amazing market indicator, but was unable to capitalize.
So now, just drive a little farther down the QEW until you see the end of development and more new contractor shops opening.
@Dave Vogt Thank you for all the information. Do you manage all your own properties or do you use a property management company? Considering I live in the GTA I think it would make much more sense for me to use a PMC. Would you be able to recommend any? Just so I know that if I choose to invest in the Niagara region then I can at least take a somewhat off hand approach to the distance from my home/work.
@Matt Geerts I agree with the potential in the Niagara region. Thank you for your advice.
I personally manage the 2 I have left right now, but I do know a few people who manage properties here. I can always put you in touch with them if you'd like.
There are many Canadian investors on this site and there is also many Canadians buying in the USA. In Texas, Canadians are the first nationality for foreign buyers, closely followed by Chinese.
My company helps foreign investors purchase in Texas and provides financing for foreign investors throughout the US (long term landlord loans).
In my experience, Canadians buy in Texas for the following reasons:
1) They want a US dollar denominated asset for diversification purposes
2) US / Texas Investments are tax efficient and laws protect the investor and landlords.
3) Texas provides good yield and has good appreciation as well.
4) Last but not least: Texas is very affordable
I have had experienced clients who already had Canadian portfolios and wanted to buy here for diversification. I also had new investors who are mainly attracted by the affordability and the ease of purchase here.
@Dave Vogt Yes Dave, could you please PM me that information. Thank you.
@Francois D. I wasn't aware of the opportunities in Texas, thank you for that. But how do taxes work? Would foreign investors get taxed twice? First by Texas/US government and then by the Canadian government when we bring the money back here?
HI gang I love in Northern Ontario invest here and in the states always love chatting with others and love meeting new people....feel free to contact me