Investing out of Ontario Canada?

13 Replies

Hi all,

I'm a Canadian rental property investor based in Ontario. As we know, over the past few years prices have gotten pretty high leading to very low cash flow. Ontario is also one of the most tenant-friendly provinces from their Residential Tenancies Act - it can easily take over a year to evict tenants for whatever reason. Rent controls have also led to a large disparity of prices between highly desired vacant properties versus those that are under-rented.

I know there's several parts of Ontario with more affordable prices, but they are all at least a few hours' drive away from GTA. If I'm using a property manager remotely anyway, I might as well also look at other parts of Canada. As far as my research goes, many other provinces have much more balanced regulations for landlords vs tenants, as well as very affordable prices.

For any Canadian investors (whether in or outside Ontario), what is your experience in investing in other provinces? Are there any areas that you would recommend? I've been looking at AB, SK and NB. Halifax NS also has "affordable" prices (compared to GTA) but I've found recently enacted regulations to be much more tenant-friendly.

I would love to connect and hear your thoughts and experiences! Cheers!

I have places in BC and AB.  Prices in BC have gone up, but so has the rent in the area of Vancouver Island where I have rentals.  In AB, I have places in southern Alberta and Lethbridge is quite affordable.  Rent prices are okay, but don't count on much appreciation as far as the house goes as prices have been pretty flat. There are a few houses being built as rentals with a detached garage and a legal basement suite that are quite nice.  BC has a transfer tax, so it adds to the cost of buying and is also tenant friendly.

Nova Scotia continues to be a strong place for my investment dollars.  Appreciation is huge and rents are close to Ontario. 

For example. There is a new build project of a 3 bed 2 bath bungalow semi with attached garage for under $400,000 that comes with a rent guaranteed of $2000 per month plus utilities for 2 years. This is geared to seniors which to me make the best tenants.  And Deposit is only $10,000. Build date is expected to be finished by February or March of 2022. 

@Nigel Liao

In Alberta, I have found the laws to be relatively favorable to the landlord, compared to many other provinces. It doesn't take a year to evict, I am not aware of regions with rent control laws, and you can set your own late fees as they are deemed "reasonable" and agreed upon in the lease.

I have been looking in the satellites around major cities in Alberta as the rents are usually very close, and the house price is noticeably less. I also find it has a higher quality tenant.

@Nigel Liao I currently only invest and live in Lethbridge and like Theresa, I have seen very little appreciation in the Alberta market over the last 8 years. Also as far as Lethbridge goes rents have been very stagnant for a long time as there a lot of people here with just one rental or they are renting single rooms in they're personal property causing the market to be super competitive. That being said I have noticed a small increase in SF rents this summer but definitely not enough to make it worth while for someone out of the area to start investing here. From talking with other investors in Alberta it seems as though Edmonton is the most progressive as far as letting investors put a suited house on a single lot with an ADU over the garage; they are also approving suited townhouses in groups of 3 but with the builders increasing they're build costs this year they are no longer cashflowing enough to make it worth while. I've herd from other podcasts and the little bit that I personally researched about Calgary's market is that they are not letting any ADU's or suited houses in new construction areas or mature neighborhoods. If you'd like more insite into the Alberta or SE BC market feel free to reach out, it would also be nice to talk to you about the southern Ontario market as I grew up there.

Alberta is a great place to look.
Calgary specifically is one of the most undervalued major cities in Canada and it is only a matter of time until it catches up.
Alberta also has decent landlord rights. (if that even exists anymore)

IMO if you are looking for a rental/ investment property with the goal of property appreciation and decent rent take a long look at Calgary.
We are already seeing a lot of migration from Ontario to Alberta and that is only going to pick up as home prices are so cheap.

As of this post, there is a full SxS duplex / 3 bedrooms per side for ~$480,000 for BOTH sides

Thanks for all your valuable insights! Happy for others to continue discussing.

@Theresa Harris   @Steve De Jaham   @Jeremy Heaman   Yeah I think the reason why AB is more affordable is because the historical appreciation hasn't been much! I'm not sure if it's a good indicator of what's to expect in the future though. I think future house prices (or rent prices) are more of a function of population growth, economic growth, money printing and available housing (or rental) supply vs demand.

With new builds having ever-increasing prices it would also make sense in the medium-term for prices to correct. I think the gap between new construction and the resale market would have to get closer. If prices of new builds can't decrease due to increasing input costs, that forces resale prices upwards, otherwise eventually there will be a supply issue.

What places in AB would you recommend (or that you're considering)? As an out-of-province investor, I might want to start with major cities since they have a lower risk (i.e. larger population --> easier to find tenants, easier to find property managers & contractors etc). I personally don't invest in any cities or towns that have a population <10,000 since I find them pretty illiquid (i.e. hard to sell etc).

With regards to ADUs being difficult to be permitted, I think that's definitely going to have an upward pressure on housing and rental prices. The cities with the most relaxed building guidelines would generally have more affordable rents. That being said I'm highly supportive on affordable housing through the permitting of more units for supply to meet demand, rather than through artificial rent controls.

Hi @Roy Cleeves ,

Where do you put your dollars? Halifax? I see that rents are quite similar to Kitchener-Waterloo (where I was living for about 7 years!). Prices are much better. I might have definitely considered investing there if I had known about it some time ago.

Are you seeing any properties meeting the 1% rule? I saw a listing for a 7 bed (both sides of a semi) going for about $400K. I think that should fetch close to about $4K in monthly rents. But they're being rented at $1000 per side which I think is quite a bit below market, which can be a tricky conversation especially with recently enacted rent controls.

@Nigel Liao Hey, I'm a fresh investor in Lethbridge, Alberta. As other investors from the town mentioned it's very stable and low appreciating market. It's a cashflowing market for sure. As what I'm seeing here in Alberta, Lethbridge economy depend on agriculture than oil so it doesn't go crazy with oil market crash. There's a huge demand for rentals as more immigrants, students (~15k-20k/yr) are coming, say 40% only stays here for long term. House prices will appreciate for sure.

Calgary has alot of activities going on. Good for flips but need connections and right system with team. So many foreclosures. Get almost 200 leads from a partner. Undervalued as compare to other big markets but here economy runs on different aspects also.

Edmonton, is a very good market to stay in for long term. There's so much startups coming out, coaches, private money access, big game for sure.

There's opportunity in small towns as well. Have seen 10% cap rate deal happend in small town.

Let's connect and talk more about our goals.

I own a few properties in St. Catharines. I don't recommend investing there any more as the appreciation in the past 12 months has been insane. However I recommend investing in college towns as student rentals are one of the best ways to extra higher rent. I've also found student renters to be less messy and almost always pays on time. I would not recommend trying to rent to locals in those towns, they can't afford 2-2.5K rent a month obviously and a lot of career renters simply jump from house to house in the same community over their lifetime faking income and references. 

Originally posted by @Nigel Liao :

Thanks for all your valuable insights! Happy for others to continue discussing.

@Theresa Harris  @Steve De Jaham   @Jeremy Heaman   Yeah I think the reason why AB is more affordable is because the historical appreciation hasn't been much! I'm not sure if it's a good indicator of what's to expect in the future though. I think future house prices (or rent prices) are more of a function of population growth, economic growth, money printing and available housing (or rental) supply vs demand.

With new builds having ever-increasing prices it would also make sense in the medium-term for prices to correct. I think the gap between new construction and the resale market would have to get closer. If prices of new builds can't decrease due to increasing input costs, that forces resale prices upwards, otherwise eventually there will be a supply issue.

What places in AB would you recommend (or that you're considering)? As an out-of-province investor, I might want to start with major cities since they have a lower risk (i.e. larger population --> easier to find tenants, easier to find property managers & contractors etc). I personally don't invest in any cities or towns that have a population <10,000 since I find them pretty illiquid (i.e. hard to sell etc).

With regards to ADUs being difficult to be permitted, I think that's definitely going to have an upward pressure on housing and rental prices. The cities with the most relaxed building guidelines would generally have more affordable rents. That being said I'm highly supportive on affordable housing through the permitting of more units for supply to meet demand, rather than through artificial rent controls.

In Alberta Lethbridge doesn't do the boom and bust that other cities do. Calgary and Edmonton have seen prices go up and down. Lethbridge keeps building and does have houses with legal basement suites. I also know a few people with STR that do really well-not as easy if you are a remote investor. You can find properties that cash flow even with a PM.

@Nigel Liao It is hard to find that 1% rule without it being very old and needing a lot of work.  What we have available now is Cashflow positive properties and price appreciation.   I still live in Kitchener-Waterloo and I agree, the rents in the Halifax area are a little lower than KW yet very close and prices are still hundreds of thousands less which makes it possible for the positive cash flow.  And appreciation is similar and in some cases higher than Halifax.