Finding Deals in Canada
Syracuse, NY · Member since 2013 · 25 posts · 6 votes
Hello all
I am a Canadian who has lived in the US for the last several years. I am considering investing in Ontario in the future.
What methods, websites, lists etc. do you use for finding properties below market value?
Are there any loan programs similar to homepath/fha etc. that are available?
Any notable obstacles for a non-resident?
Any info is appreciated. Thanks!
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Hi Daniel,
Canadian market is in a very different situation than US, here prices have been increasing every year for probably 2 decades with very few exceptions, so prices are high.
There is almost no foreclosures, there is multiple offer situations with people offering more than asking price.
I have been investing in Toronto downtown in the last 7 years in triplexes and getting returns of around 15% cash on cash through buy in bad shape /renovate/rent/refinance which requires a lot of work and capital in the first year. Like it was said before, you have to create cash flow/equity.
According to my analysis, you get bigger returns on properties/buildings with more than 3 apartments.
I am now looking in Hamilton since there is a chance of more cash flow without doing anything.
Financing is important. The reason I am not investing in US is because I can buy with 20% down and get higher ROI than buying in US with 50% down or all cash. In some areas of Canada there is still a possibility of getting 5%/year appreciation even with insanely high prices.
I don't know what kind of financing you can get in Canada.
I think you are on a good track by staying in US.
Did you take a look in Buffalo? I heard there is a revival in some areas of the city like it's happening in Hamilton/Ontario.
Filipe
@Daniel Ringwald, that's a different approach. Most of us in Ontario are trying to get down south and fighting the obstacles there. We don't have loan programs similar to homepath/fha here. There seems to be little wholesaling going on here because even foreclosures sell for below market value. But other local experts will give better pointers for this question.
Welcome to BP. (It's minus 31 in windchill today in T.O. Damn!)
Dominika
Thanks @Dominika M I appreciate the feedback. I was considering it only because I have some connections nearby that can keep an eye on property, but when you factor in higher taxes, higher financing scrutiny and lower rent ratios it seems like I'd be better off paying a property manager in the US.
@Daniel Ringwald I'm in BC and don't know too many investors who are more interested in the Canadian market than the US. Some advantages might be the current state of the dollar and qualifying for traditional financing if you're a Canadian.
If you wanted to proceed you would want to speak with an accountant about reducing the impact of double taxation.
I certainly think there are opportunities to be found, particularly if you have some kind of insider knowledge or connections that will give you an advantage in the market. Which areas in Ontario are you considering? I've looked into London for student housing in the past.
@Greg Rulfs I was thinking Milton, North Oakville, Burlington areas. There has been a lot of growth in these areas so the appreciation aspect was attractive to me at first. After looking into it more, I just don't see the monthly cash flow which is what I am more interested in.
Did you pursue any opportunities in London?
I was born in POCO and have family all over BC so I am pretty familiar with the area. What investments do you have in the Vancouver area?
@Daniel Ringwald I've never looked into those markets myself but understand the area in general is growing fast! I don't think you'll get the same kind of cash flow you typically see in the "hot" US markets.
I haven't done anything in London yet, however, I would like to make use of my borrowing capacity here if the investment makes sense.
I've looked at Surrey and some of the regenerating areas of Vancouver City, but don't own anything here. I'm just starting out and the buy in is too high for me. Not the case in Ontario though.
@Greg Rulfs Yeah after looking at the numbers, in general the cashflow isn't anywhere close to some of the US markets.
Best of luck!
I live In southern Ontario(guelph area) and have noticed some investors but not many. I have called a couple bandit signs but half of them seem to be disconnected numbers so maybe that's a sign of our market not being investor friendly? Anyway I recommend Don r Campbells the ACRE system great book on Canadian long term real estate investing and a fun read.
thanks @Samuel Sedore I will check out that book.
I would agree from what I have seen many of the big cities in ontario are tapped out for monthly cash flow producing properties. house prices are increasing at a faster rate then rent especially with such low mortgage rates everyone would rather buy but I would assume there are some hidden gems you just have to look hard enough and maybe stay clear of Toronto
I appreciate the feedback. That was the feeling that I had, but was curious because there are a few areas of townhouses in Northwest Oakville that are almost exclusively used as rentals. I suppose the owners are trying to make money on appreciation, or by 'creating it' as you said rather than monthly cashflow. I don't know the other markets you mentioned well enough, so I will focus on Rochester/Syracuse markets instead.Thanks!
Hi Daniel,
Canadian market is in a very different situation than US, here prices have been increasing every year for probably 2 decades with very few exceptions, so prices are high.
There is almost no foreclosures, there is multiple offer situations with people offering more than asking price.
I have been investing in Toronto downtown in the last 7 years in triplexes and getting returns of around 15% cash on cash through buy in bad shape /renovate/rent/refinance which requires a lot of work and capital in the first year. Like it was said before, you have to create cash flow/equity.
According to my analysis, you get bigger returns on properties/buildings with more than 3 apartments.
I am now looking in Hamilton since there is a chance of more cash flow without doing anything.
Financing is important. The reason I am not investing in US is because I can buy with 20% down and get higher ROI than buying in US with 50% down or all cash. In some areas of Canada there is still a possibility of getting 5%/year appreciation even with insanely high prices.
I don't know what kind of financing you can get in Canada.
I think you are on a good track by staying in US.
Did you take a look in Buffalo? I heard there is a revival in some areas of the city like it's happening in Hamilton/Ontario.
Filipe
Canadian market is in a very different situation than US, here prices have been increasing every year for probably 2 decades with very few exceptions, so prices are high.
There is almost no foreclosures, there is multiple offer situations with people offering more than asking price.
I have been investing in Toronto downtown in the last 7 years in triplexes and getting returns of around 15% cash on cash through buy in bad shape /renovate/rent/refinance which requires a lot of work and capital in the first year. Like it was said before, you have to create cash flow/equity.
According to my analysis, you get bigger returns on properties/buildings with more than 3 apartments.
I am now looking in Hamilton since there is a chance of more cash flow without doing anything.
Financing is important. The reason I am not investing in US is because I can buy with 20% down and get higher ROI than buying in US with 50% down or all cash. In some areas of Canada there is still a possibility of getting 5%/year appreciation even with insanely high prices.
I don't know what kind of financing you can get in Canada.
I think you are on a good track by staying in US.
Did you take a look in Buffalo? I heard there is a revival in some areas of the city like it's happening in Hamilton/Ontario.
Filipe
yes take a look at Buffalo, if you have any questions about Buffalo let us know. We can give you a hand. I will also be up in Toronto this weekend for a meet up if you want to chat.
Mike
Rehabing a fixer upper with 3 apartments in Ontario may cost 150K if you hire a contractor to do the whole work and management, including all electrical and plumbing.
I can do a Rehab for around 35K if I don't need to redo all electrical and plumbing (3 brand new kitchens and baths), but I have to hire contractors by the hour, be there every day and tell them what to do and not to do.
You also have to know what the tenants like or not and what they are willing to accept.
Filipe
Originally posted by @Filipe Matos:
Yes, on a national level, SFHs are nearly 5.5x family income. In TO and Vancouver that number spikes to between 8 & 11 times. The national average would be much higher if not for the Atlantic region (slower economy, not as much increase in real estate prices). Prices cannot go up indefinately, especially given the fact that wages/salaries for most of the population have been stagnant for 30yrs.
There are foreclosures happening all the time, they are just handled differently here in Canada. You will not see the number of highly discounted foreclosure, REO and tax sales here that you read about in the U.S.A. There are several factors behind this; two of the more prevalent are the {relative} size of the real estate markets in Canada and the banking regulations requirement for lenders exercise of fiduciary care to protect the equity of the owner & sell the property at FMV.
Are you accounting for your time at fair-market labour rates or are you, like many of us, working for free? This will make a huge difference in the *real* returns of your investment. Either way, making an 15% return on your initial investment is all smiles.
I'd be interested in more details on your insights. Larger properties bring you economies of scale, more stable cash flow, but, typically, less appreciation than a residential (1-4 unit) property (because they are run like a business) ... though in TO, with its condominium addiction, there is plenty of speculation on larger properties as well.
"Money for nothing and chicks for free" ... only if your are an 1980s British rock band. Hamilton is a predominately blue collar city whose fortunes - and yours - are tied to the steel industry. You need to take the economic prospects into consideration before you buy. There are many smaller cities/towns in the maritimes where apartment buildings can be had "cheaply", but the local economies are tied to a dying industry, so the longterm prospects are for higher vacancy and a lower quality of tenant.
You can obtain LTVs of 65 - 85% in the U.S.A. with a few lenders. Our preference is also to buy at home, but late last year we started learning about different Cities in the U.S.A. as we can probably get more return for our dollar there at the moment.
In many parts of the country property prices are flat or declining. If you are going to move from residential (1-4 units) to larger multifamily buildings you will need to look at things like a business: it's all about the operating margins and cash-flow. Commercial lenders are not going to be swayed by forecasts of 5% year-over-year inflation, they will want to know the property still holds its head above water if there is a 20% correction in property values or a 5-10% increase in vacancy.
I mentioned in your other thread that you might want to touch base with @Gary McGowan as you are in his sandbox and he may be able to assist you with your search for an apartment building/complex.
Once again ... welcome to BP!
To Roy's point (smart fella) do your homework. There are lots of areas to invest in Canada where you can turn a tidy profit. Regardless of your methods. There are deals everywhere if you are willing to do the work and get your hands dirty or at least be on top of trends and markets.
"Money for nothing and chicks for free" ... only if your are an 1980s British rock band....love this...too funny and very true.
The biggest reason Hamilton has seen this increase is the same reason for all outlying areas of Greater Toronto...commuters. The economy in Hamilton is not all that great, but it is close to all major highways and trains, therefore people will live and commute. Upper mountain area is the best, but getting more overpriced everyday.
Don Campbell...smart fella too! Told everyone that Hamilton was an up and coming area 4 years ago. He was right. Now it's time to follow the trend out and away from TO.
I have a normal 9 to 5 Job, I have a contractor of my trust now that does 99% of the work and I just follow up and verify the work at the end of the day if needed, I deposit the rent cheques and answer and make calls, plus deposit rent cheques, etc... It helps to have fairly good tenants. So in the end I do not waste too much time with it, I delegate as much as possible.
I work for free like stock investors do when they have to follow up the market every single day.
I am now looking at Hamilton apartment buildings with 10 apartments because I am not interested in buying 150K properties and have to manage tenants and repairs all over the place to just get $500 per property at the end of the month. So this is my personal choice, it does not mean it is more profitable, but maybe it is more profitable, at least thats is what my calculations show. Again this answer your question about working for free, I do not like to work too much for little money :)
In Toronto MADE sense for me to buy residential 3/4 plex, its expensive, good appreciation, rents are high, less work for higher returns.
I think Hamilton is no longer a Steel Town, as far as i know, as of now not even steel is manufactured there anymore. And that is probably the beauty of it, less polution, less image as a steel town, artists from Toronto are moving in, Universities are opening more campuses, families may start moving to hamilton and work in the GTA , etc...
I dont find the other GTA markets with such good prospect as Hamilton. But we have to be careful about some areas of hamilton, a lot of bad tenants out there.
Stelco steel left Hamilton a few years back and there were negotiations about building a professional football stadium for the Hamilton Tiger Cats. Not sure if that deal is still on the table, but there is a revitalization project in the works for Hamilton. Like any other city it has its pluses and minuses, you just have to do your homework.
By the way, it's great to see the Canadians out and about on the forum. Thanks for the laughs and sharing your experiences!
I would agree Filipe...It has always been my goal to go to the 10-12 unit buildings from where I am now. Flipping houses for me is the transition into this market. I want to skip right over the 3-4 unit buildings as they are classed as residential investments and right into the commercial.
Every effort you make to improve the building, each expense you lower, every rent you increase, is a direct increase in NOI and a straight up increase in the value of the property. Such a cool structure. More importantly the banks tend to look more at the property and it's performance vs. you the investor.
CMHC is really on board with these types of units with up to 85% loan to value available. It's such a great way to build an empire. Getting closer each year and building up my list of investors to transition some of these properties. They can be work, but so worth it in the end.
Have you thought of going a little further south. The markets down here are really good as well. Something to think about. As that circle moves further from Toronto the values are slowly creeping up in the areas surrounding Hamilton. Such as Grimsby, St Catharines, Stoney Creek.. although I was looking that way a while ago and nothing came up on the radar. I find to get buildings like this you almost need to reach out to the owners themselves.
Welcome to our discussion.
Please take a moment to read the Forum Rules and restrict solicitations to the Real Estate Marketplace.
i apologize and will do in future
I thought about going more south or more east, I am still kinda open to it but I suffer from 2 conditions:
- I do not like to drive/commute for more than one hour
- I like to micro manage renovations. I have 2 properties in Portugal and I dont get the most of them and sometimes I lose money because I am not there. A Property manager no matter how good he/she is , its an employee, not an owner.
My target tenant is someone that is young, likes cool apartments, has sense of style, willing to pay above average rents, someone that likes to live in big cities and trendy areas.
Hamilton is close by and its a big city with up and coming areas. I can always change my mind if there is better oportunities elsewhere.
Filipe
@Dominika M @Simon Lloyd @Victor Parag @Daniel Ringwald , I hope you are getting some juicy tid bits
@Haidar N. what is the Market like in Windsor for buy & hold and buy & flip?
The last I heard, people were leaving due to job loss, etc and although there are alot of students from the University, the rental market was in a slump. Is this still the case?
@Belinda D. yup, I've been monitoring, thanks! lol.
Thanks everyone for the discussion.
@Belinda D. Thanks for tagging me, I have indeed been watching!
Thanks also to @Dave Vogt and as always @Roy N. for all your great CanCon lately :).
I actually visited Windsor recently for a day looking for my next buy-and-hold. Prices still seem good (granted I'm comparing to GTA prices and not, say, Milwaukee or Indianapolis, etc!); there's evidently a good tenant pool; and there seems to be optimism in industry (some auto mfrs are apparently returning, downtown beautification, new border bridge) and--maybe most surprisingly(!) there are some REALLY nice neighborhoods!!
Hamilton looks like it has some inexpensive properties for sure but to me looks like a lot of iffy areas still.