Is the real estate market different in Canada?

6 Replies

Hello everyone, 

Regards from Eastern Canada.  I am a newbie in the real estate business and I am hunting a deal to get my first property; however when I am trying to follow the suggested rules to analyze a deal it seems the market here in Canada is a bit different.  For example, the suggested rule that your monthly rent income should be at least 1% of the price you paid for a property seems a little bit too high for the market here in Ontario, Canada.  Can anyone give me your opinion on this?  Thanks in advance!!!!

Andrea

@Andrea Echeverria  The advice on BP is, mostly, specific to America only. US and Canada are very different - prices, financing, supply/demand factors, etc. Most of the analyzers you will use do not take into account the peculiarities of the Canadian market (and it shouldn't because this is an America website).

@Roy N. is from East Canada and should be able to guide you. 

Hello Andrea:  That used to work 15 years ago yet not now.

I am in Ontario in Kitchener Waterloo and we are happy to find a property that can break even for cashflow or have a small positive or small negative each month and it still works out as a good investment due to the expected appreciation in value over time and the expected rent appreciation over time and the paydown on the mortgage over time.  

You can also find making two units out of a bungalow or similar type of home can create positive cashflow.  You rent out the upper and lower units and the total creates positive cashflow that may not be available in a regular single family unit.

@Andrea Echeverria

Welcome to BP.  However, I would contend that Ontario is central Canada, not East - there's another ~2000km of Canada east of Ontario ;-) 

Those 1%, 2%, xx% "rules" you read about here on BP are more correctly "rules of thumb" and can be useful to quickly triage a property when you encounter it.  

Knowing your expected/required return on your investment, you would use that as your hurdle when conducting an in-depth analysis of a property.

So, if you are looking in the East, feel free to reach out.

Hello Andrea, 

I'm over on the West Coast and I definitely cannot apply the 1% rule to real estate over here. However, I would just run numbers carefully on the properties you have available and start to narrow down areas in surrounding areas that have the most potential for growth in the city, appreciation, new infrastructure, etc. Find out how much the city utilities and taxes are compared to property prices and rental prices (craigslist is useful for checking rental prices), and then see where you want to start investing with the best return on investment. You might not be able to cashflow at the amazing numbers that our lovely American friends can (I'm so jealous!), but you can start applying the BRRRR strategy to rapidly grow your number of rental properties.

Good luck!

Marie

I'm glad to see this thread. I used to live and invest in the US and recently moved to Toronto. I have also been really disappointed in the lack of potential cash flow I'm seeing in looking for real estate here, so I am trying to figure out how to go about investing in real estate here.