Investor · Turks and Caicos · Member since 2014 · 22 posts · 7 votes
Hey Everyone,
It seems like BP is dominated by US investors, which is great, but I'm wondering where are all of my Canadian friends? The concepts of investing in real estate are the same, but mortgage and tax laws can be quite different between the two countries. It would be nice to connect with Canadians and see how they are succeeding in the Canadian marketplace.
It would be a good opportunity to share information about preferred markets and discuss market fundamentals in those areas.
I'll start.
I have 2 rental condos in Ottawa, Ontario. I have lived there for 10 years and know the area quite well. Some pretty big things are happening in Ottawa right now. I'm also looking at the East Coast of Canada where I grew up. The cost of homes are much more reasonable there and can lead to good ROIs.
I would say ROI in general in major Canadian cities like Toronto, Montreal, Vancouver are next to crap. Sorry for leaving out Edmonton and Calgary because they may have more cash flow then the above mentioned. Prices are too high here and the rents don't reflect.
I see value in smaller cities like Hamilton, Waterloo, Kitchener London in Ontario. Sorry I don't know much of the rest of Canada as I am from Toronto.
Gross rental multiplier in major US cities can be as high as 100% than Toronto and likely more.
You can buy a $350,000 1+1 condo in Toronto and get only $2000 a month rent and 0 cash flow with the maintenance fees eating up all the cash flow.
Take that $350,000 150 km south to Buffalo and you can buy 4-5 duplexes that yield at least $4000 a month and cash flow at least $800 a month even with management fee, vacancy rates, maintenance costs already incorporated. This is being very conservative.
I hope this opens up on how much $$$ there is to be made down south. Don't let those double tax crap fool you as long as you have a good accountant on your side.
I can go on and on about the advantages
I honestly don't look at a deal unless it is a minimum 20% cash on cash (not including equity)
I spent months on research so this is not something you learn overnight..
I know this thread started over a year ago, but I have to say I've seen a lot of Canadians on BP since I joined.
I no longer live in Canada, but when I added Canada as a keyword, there were related posts every day.
It's always great to hear about the market back home.
@Roy N. Has got the right idea give it 2 months and well all be enjoying the small window of opportunity to walk down the road without face stinging wind, sore backs from shoveling and wet feet. Until then we must hermit away in our offices lol
Great reading. I'm using the equivalent of a dollar cost averaging approach with capital in BC, Windsor, ON and the Maritimes. The greatest number of properties is in the Maritimes but the total dollar value of all those is less than a fraction of the BC properties so I'm continuing to look there. I like to hedge against geographical risk since I can't predict with any certainty where each local economy is going (is Vancouver going to tank? Will the auto industry close down and all move to Mexico? Is New Brunswick going to zero population?). Not sure if it's a smart strategy - I'll know in a few years.
I just found BP and the information is certainly interesting. I recently started a company that provides bulk internet to condos and multi-unit rental buildings with the goal of saving residents money over individually purchasing from the big Canadian telecoms.
Have any of you included internet in your buildings? We are looking to strengthen our value proposition with evidence based on Canadian landlord's experience. If you have provided internet to your residents and want to share your experience I would love to hear it. Did you lower your vacancy rate? Were you able to get more rent?
I just found BP and the information is certainly interesting. I recently started a company that provides bulk internet to condos and multi-unit rental buildings with the goal of saving residents money over individually purchasing from the big Canadian telecoms.
Have any of you included internet in your buildings? We are looking to strengthen our value proposition with evidence based on Canadian landlord's experience. If you have provided internet to your residents and want to share your experience I would love to hear it. Did you lower your vacancy rate? Were you able to get more rent?
It seems to me that this is something that would be better for condo buildings than for multi-unit rental buildings, except for luxury ones. In my experience, the advertised rental rate matters a lot to get your unit rented, and when you add on more services/utilities, you need to charge more in rent. It might work if I could charge a base rent and give them the option to add on services.
For example, it might be easier to rent a unit for $600 + hydro when the bill is around $150 per month, even though you might only be able to rent the unit for $700 when you include the hydro. They're more sticker shock on the higher rents.
Multi-units focused on students or short term rentals would be a great place for this, as they are likely already paying for internet.
Condos may like it as well where it is less about the bottom line, but makes the most sense for residents.
@Luc Boiron You are correct that this works exceptionally well for condo buildings. the problem condo buildings run into is that they don't have the infrastructure and it will cost between $700-$1,000 per unit to wire the building. We will fund that build and amortize it over the life of the contract so that the condo corp does not need to make a major capital expenditure.
For rental buildings the value is a bit different. The assumption is that everyone will buy their own internet once they move in for a cost of somewhere near $65 per month or more. If the landlord can get that connection for about between $30 and $40 per month could they get $50 more per month? Could they get their units rented at their regular rate a few weeks sooner? These are the questions that I would love to hear answers to from landlords that have done it.
Hi, I'm new to BP but I found this thread in hopes of connecting with more Canadian's. I'm living in small town Sask. and so far all our properties are local.
I'm interested in other markets and I'd like to hear how things have changed in AB the last two years.
Leona.
I drove through Moosomin with my son three years ago on our way from a family reunion on Kenosee Lake, but it's been years since I've really been there. I had family who farmed between Rocanville and Moosomin.
@Roy N. small world! Yes being on the number one we get passed through a lot. So I take it your family doesn't farm here anymore? Kenosee lake is nice, we camp there often.
I still have some cousins, of whom I've lost track, in the area, but the War generation which tied the family together has passed on (all but one spouse).
Very few posts from the Fraser valley here, this is my first post on BP but i spend a fair amount of time on the CanadianMoneyForum.
Anyone care to comment on the expansion blowing up in the valley? Seems developers are taking advantage and new buildings are going up everywhere with low vacancy rates. Im hoping to network and make things happen..
Hey, I posted a separate thread and got no response. I'm one of the unfortunate people with real estate inside a corporation hoping to connect with others on the same position and come up with a plan. Here is my original post.
Wanted to start a thread addressing the implications of the proposed tax changes to Canadian corporations. I will be greatly affected and am worried about our viability in the future. Wondering how you plan on easing the transition, or how you'll adapt going forward. My accountant has drafted up a letter template to send to our local MP and I can forward it on to anyone that would like.
Hey, I posted a separate thread and got no response. I'm one of the unfortunate people with real estate inside a corporation hoping to connect with others on the same position and come up with a plan. Here is my original post.
Wanted to start a thread addressing the implications of the proposed tax changes to Canadian corporations. I will be greatly affected and am worried about our viability in the future. Wondering how you plan on easing the transition, or how you'll adapt going forward. My accountant has drafted up a letter template to send to our local MP and I can forward it on to anyone that would like.
Leona:
If you are holding real estate inside a corporation for the purposes of generating rental income, such income is already considered passive and taxed at the full corporate tax rate (does not qualify for CCPC small business tax reductions)
... UNLESS ... your corporation has 5, or more, full-time employees, in which case you become an "active company" and do qualify for the small business tax reduction (provided your revenues do not exceed the limit).
If you are in the first situation, the proposed tax changes are not going to have much effect on you. In the latter situation, you would be facing the same issues and any other small business owner.
Roy N. yes we hold rental property in our corp for the purpose of generating income. It is currently taxed at 51% as it does not qualify for the small business tax rate (our construction side is still at the SB tax rate). Not sure what other provinces will increase to but if this goes through instead of the 51% rate it will be 70% Manitoba will be 73%. As of now we don't know if there will be some sort of grandfather clause or how it will be structured. Getting it out of the corp isn't an option as paying full market value would put us over every limit.
Roy N. yes we hold rental property in our corp for the purpose of generating income. It is currently taxed at 51% as it does not qualify for the small business tax rate (our construction side is still at the SB tax rate). Not sure what other provinces will increase to but if this goes through instead of the 51% rate it will be 70% Manitoba will be 73%. As of now we don't know if there will be some sort of grandfather clause or how it will be structured. Getting it out of the corp isn't an option as paying full market value would put us over every limit.
Leona:
I do not think the taxes paid by your holding company will increase to 70% - that wasn't our read of the limited information available.
The combined tax rate (corporate, followed by personal) on dividends paid to non-involved adult family members may increase to close to those levels if the dividend tax credit is disallowed.
The impact will be greater on your construction company if it pays dividends to non-inolved family members or re-invests its retained earnings outside of the business. Essentially, your "active" construction company will have any retained earnings re-invested outside of the company taxed as passive (basically the same has your holding company).
I agree, until we find out the specifics we are only speculating. However if the proposed changes are implemented the way it was explained to us we will be paying 70% overall on any "passive" income. It's frustrating as we have already been paying more for this property through the corp than we would have if it was held personally.
Our construction side won't actually suffer as greatly as we pay ourselves as employees and the small amount of dividends are only paid to the two of us who are full time and actively working.
That example case has been published several times - it's a very specific situation that assumes the owner is in a top tax bracket when they withdraw the retained earnings.
The big impact, for my {non real estate} business will be the treatment of re-invested retained earnings as though it were passive income. We've done this in the past to allow us to both help grow the business and smooth earnings over volatile times (to avoid laying off staff).