Newbie in Canada stuck in a dilemma.. need help

12 Replies

Hello guys,

I am a new immigrant here in Toronto, Canada. I have been eyeing my first ever REI since I am here. Now that I have some funds accumulated around 30k, I was looking at going for a rental property which would make me cash flow positive even if it's a very small number. I just want to learn from it.

Current situation: At the moment, we are staying in a rented condo in Toronto and we are very happy with the locality.

Current financial situation: I can get approved for a property up to 450K. Wifey has just got a job and she can be approved of another 300K and AFAIK we would have to wait for another 3 months for her mortgage to be approved. That is to wait it out till Jan 2022.

While scouting most of the properties, almost all of them seem to be negative cash flow in and around Toronto.

Dilemma: Should I just buy a property (upto 450k) with 5 % down right now or just wait it out add both of our mortgage and by a bigger property up to 750k). Will student rental be a riskier bet considering I am a newbie at this?

Focused localities:

ON- Peterborough. Guelph, London & Windsor
BC - Victoria & Parksville

I would like to hear about what do you guys think should be my approach and in what cities considering the amount I am planning to invest in is a tad bit smaller. Do you think I may get an opportunity to buy SFH and add another storey/ floor to it at this price point?

P.S I am open to JV's with like-minded individuals. Also, it would be great to build up a team of realtors, mortgage agents & handyman who understand the need for investment properties.

I can't speak to ON, but I have places in and near Parksville (and some in Alberta).  Houses start in the low $500K in Parksville.  Victoria will be more expensive.  Rent is great as there isn't a lot on the market, but see if they'd cash flow.  I bought mine a few years ago (5+) when prices were lower.   Avoid condos as the condo fees eat up cash flow.  As they will be long distance rentals, you need a manager.  I'll send you a PM with a few names (I use one of them).

@Chirag Rathod Happy to hear you are interested in reak estate! Do you have your PR? Also Are you open to other places than what you mentioned? I am always curious as to why people are interested in doing a JV? If you coul buy it on your own with other peoples money, would you rather that?

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Originally posted by @Theresa Harris :

I can't speak to ON, but I have places in and near Parksville (and some in Alberta).  Houses start in the low $500K in Parksville.  Victoria will be more expensive.  Rent is great as there isn't a lot on the market, but see if they'd cash flow.  I bought mine a few years ago (5+) when prices were lower.   Avoid condos as the condo fees eat up cash flow.  As they will be long distance rentals, you need a manager.  I'll send you a PM with a few names (I use one of them).

Thanks a ton, Theresa.

Originally posted by @Melanie Dupuis :

@Chirag Rathod Happy to hear you are interested in reak estate! Do you have your PR? Also Are you open to other places than what you mentioned? I am always curious as to why people are interested in doing a JV? If you coul buy it on your own with other peoples money, would you rather that?

@Melanie Dupuis: Yes I have my PR. I will be open to considering other places as well. The reason why people are interested in JV is that at times, some good properties might need additional funds which can be taken care of with a JV. For me personally, if I can buy it directly with my money, nothing like it.

@Chirag Rathod You do not need JV's in order to access additional funds. This is a common belief, that we struggled with when we first started! I think you need to learn how to access OPM and use those funds to solely ownr income properties. There are so many markets which have different outcomes such as cadhsflow, or appreciation. Happy to hear you have your PR! We have a lot of mentees that are able to purchase real estate without the PR, however you have an advantage having it!

@Chirag Rathod  

Welcome to the wonderful world of REI, I'm a Toronto-based investor and have a few properties in Peterborough. I think it's a great market with a lot of room to grow. BTW great job on taking advantage of a low downpayment on your first house. If I could buy my rentals for 5% I'd be picking them up at a monthly rate.

I would avoid student rentals on your first one. They have high turnover and involve more work and wear and tear.

IMO I think the best entry-level rental strategize in Ontario is buying a single-family home and adding a legal 2nd suite to the basement. Its offers powerful cashflow and there are a lot of business/services that can help you with that. 

Have you checked with a good mortgage broker to double-check on your affordability? Just because one of the big banks said 450k doesn't mean it's your only option. There are a lot of lenders in Ontario. and a good mortgage broker will be able to connect you with them.

@Chirag Rathod A couple of advice if you want to pull the trigger sooner rather than later. 

1. A minimum down payment (less than 20% down) mortgage is structured as your primary residence. To qualify for a larger loan in this situation, consider a property with a legal suite because the rent revenue counts as your income. 

2. Is your wife's new job a continuation of her career path? There is a way around the 3 month wait.

Originally posted by @Nuno Barbosa :

@Chirag Rathod 

Welcome to the wonderful world of REI, I'm a Toronto-based investor and have a few properties in Peterborough. I think it's a great market with a lot of room to grow. BTW great job on taking advantage of a low downpayment on your first house. If I could buy my rentals for 5% I'd be picking them up at a monthly rate.

I would avoid student rentals on your first one. They have high turnover and involve more work and wear and tear.

IMO I think the best entry-level rental strategize in Ontario is buying a single-family home and adding a legal 2nd suite to the basement. Its offers powerful cashflow and there are a lot of business/services that can help you with that. 

Have you checked with a good mortgage broker to double-check on your affordability? Just because one of the big banks said 450k doesn't mean it's your only option. There are a lot of lenders in Ontario. and a good mortgage broker will be able to connect you with them.

Thanks @Nuno Barbosa for your suggestions. The 450k amount is what I got from a mortgage broker, have not checked it with banks. I am not sure how does adding up additional suites to the single-family home works- Do I need to get permissions from the municipal corporation, is there any particular zoning the house should be in to tackle that, What kind of approximate costs are involved in building that since I am not sure if banks would give money for the renovation as well. Can you please share some insights on this? Once again: Thanks a ton for helping me out.

@Chirag Rathod

Hey Chirag, Yes you would go through the local city to get a permit to add the 2nd suite. For the first one you want to be working with professionals who understand how the process works. 

I recommend you work with a local real estate agent in the city you're interested in. Make sure the agent also owns rentals and has done legal 2nd suites in the past. This way they will connect you with contractors and architects they have personally used and vetted. They will also know what houses to avoid when you are looking at houses.

Getting a permit from the city and doing a renovation can seem overwhelming but as long as you team up with the right people it's a fairly easy process. 

I have properties in Peterborough, Barrie and Uxbridge. If you are interested in any of these areas I can connect you with good people.

Originally posted by @Julie Toh :

@Chirag Rathod A couple of advice if you want to pull the trigger sooner rather than later. 

1. A minimum down payment (less than 20% down) mortgage is structured as your primary residence. To qualify for a larger loan in this situation, consider a property with a legal suite because the rent revenue counts as your income. 

2. Is your wife's new job a continuation of her career path? There is a way around the 3 month wait.

Hi @Julie Toh, Thanks for your suggestions.For the 1st one, I will keep that in mind. For 2nd one, my wife did not work formally before we migrated. I am not sure if it would work in this case. Thank you.

Originally posted by @Nuno Barbosa :

@Chirag Rathod

Hey Chirag, Yes you would go through the local city to get a permit to add the 2nd suite. For the first one you want to be working with professionals who understand how the process works. 

I recommend you work with a local real estate agent in the city you're interested in. Make sure the agent also owns rentals and has done legal 2nd suites in the past. This way they will connect you with contractors and architects they have personally used and vetted. They will also know what houses to avoid when you are looking at houses.

Getting a permit from the city and doing a renovation can seem overwhelming but as long as you team up with the right people it's a fairly easy process. 

I have properties in Peterborough, Barrie and Uxbridge. If you are interested in any of these areas I can connect you with good people.

It would be great if you can help me connect with the individuals in those respective cities. Somehow, I feel Barrie & Uxbridge will be way over my budget :)

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