Real Estate Agent · Kitchener-Waterloo-Cambridge, Ontario · Member since 2013 · 408 posts · 90 votes
10y
I stick to my market because I know it in and out, but I would say pick either KWC or Hamilton if starting anywhere as we are the 2 fastest growing area in Ontario, while still maintaining a reasonable price entry point. Oshawa, Whitby area is also fantastic for growth but is becoming more un-affordable. London is great for cash flow but has slow steady growth. Although anyone can find success in any market, Oakville is expensive but I'am sure this is opportunity somewhere in your backyard.
I try to focus on anything in my area with an 7-8+% cap rate not easy but achievable, also must maintain positive monthly cashflow.
Although it's getting tougher and tougher, we say over 6% appreciation last year and Toronto money is starting to flow into the region raising that number even higher.
http://www.meetup.com/K-W-C-Multi-Family-2-units-Investor-Mastermind/ Come check out my monthly investor meetup if you're curious about my market and networking with some other investors. Next months guest speakers are actually based out of the Oshawa area.
Specialist · Toronto, Ontario · Member since 2016 · 564 posts · 425 votes
10y
I'm buying anywhere and everywhere that makes sense @Sarah Larbi!
I know it's tough because your main market of Brantford is getting a little more expensive. Keep looking for those deals! The returns on properties everywhere in southern Ontario has shrunk. To get the 1% rule now, you need to go into areas that used to get 1.50%-2%. And the rule isn't always the best...when you get into small towns in cheap old properties, your rent might be 1.5% your purchase price, but your expenses are higher in proportion to the rent, and the tenants are more of a headache to deal with.
Right now, I'm invest more actively. I just closed on a flip in Toronto, and I'm looking at other.
We've got some investors here from London, @Account Closed is an investor friendly realtor if you decide to invest in the GTA.
Bradford, Ontario · Member since 2015 · 11 posts · 5 votes
10y
We just bought and getting .84 % We're finding it very difficult in our area ( bottom ends of lake Simcoe ) to get anything above .7 % So we buy run down or owner renovated and turn them into multi's
Real Estate Agent · Kitchener-Waterloo-Cambridge, Ontario · Member since 2013 · 408 posts · 90 votes
10y
I stick to my market because I know it in and out, but I would say pick either KWC or Hamilton if starting anywhere as we are the 2 fastest growing area in Ontario, while still maintaining a reasonable price entry point. Oshawa, Whitby area is also fantastic for growth but is becoming more un-affordable. London is great for cash flow but has slow steady growth. Although anyone can find success in any market, Oakville is expensive but I'am sure this is opportunity somewhere in your backyard.
I try to focus on anything in my area with an 7-8+% cap rate not easy but achievable, also must maintain positive monthly cashflow.
Although it's getting tougher and tougher, we say over 6% appreciation last year and Toronto money is starting to flow into the region raising that number even higher.
http://www.meetup.com/K-W-C-Multi-Family-2-units-Investor-Mastermind/ Come check out my monthly investor meetup if you're curious about my market and networking with some other investors. Next months guest speakers are actually based out of the Oshawa area.
Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
10y
Hi Sarah, I'm from Oakville as well.
There is really nowhere to reach even the 1% rule let alone 2% except in small rural towns as Luc mentioned above. The best I ever did was a student apartment in London at 0.8%, and then sold it for about 0.6% two years later (without adding any value). Places like Windsor, Sarnia and northern Ontario used to have deals like this, but the rising tide is lfiting all boats and pushing prices up everywhere in Ontario.
I now buy in the US where 1% is easily achievable - in fact wouldn't buy anything less than this.
Rental Property Investor · Oakville/ Brantford, Ontario · Member since 2015 · 147 posts · 91 votes
10y
@Luc Boiron Thanks for the insight. Congrats on the flip! I am closing on one that I bought for 165k and will be renting for 1300. Not 1% but that's as high as I think I can get it in my market. Was wondering if there are better areas for this. I heard London was pretty good...
Rental Property Investor · Oakville/ Brantford, Ontario · Member since 2015 · 147 posts · 91 votes
10y
@Samuel Sedore thanks I heard KW was a great area I did run some numbers there ... I think it would appreciate more than Brantford may but the cashflow worked better in Brantford. What about Cambridge?
Rental Property Investor · Oakville/ Brantford, Ontario · Member since 2015 · 147 posts · 91 votes
10y
@Chad U. I am realizing that the 1% rule may not work anymore in my region (Brantford not Oakville as that's way too expensive) unless maybe you go to thunderbay but I keep hearing in the US it's 1%or even 2% and that those numbers are fairly achievable which is amazing for them.
@Luc Boiron Thanks for the insight. Congrats on the flip! I am closing on one that I bought for 165k and will be renting for 1300. Not 1% but that's as high as I think I can get it in my market. Was wondering if there are better areas for this. I heard London was pretty good...
Thanks Sarah!
You're a cash flow investor, and it's good that you're sticking to that. The flipping is a way for me to generate capital now, but I do plan an getting more cash flowing properties.
Is this your fourth property that you are closing on? Congrats!
The BRRRR method might be good for you. You seem to know the market well in Brantford, and this method might help you get into the properties with less capital while still being able to cash flow.
Let me know when you decide what to do, and if you pick another market to buy in. I'm curious where you will end up.
Rental Property Investor · Oakville/ Brantford, Ontario · Member since 2015 · 147 posts · 91 votes
10y
@Luc Boiron yes this is the 4th rental property in Brantford I am going to try and do another in the fall as I want to get to at least 2 buy and holds per year. The prices are getting higher now though than a couple years ago. If I find a good one to BRRR I think that will be the next move.
I always forget to mention the include Cambridge in the KW area. Personally I own 5 doors in Cambridge I love it! I get cash flow plus we saw 5.8% appreciation last year so best of both worlds. Cambridge there is an under supply of good condition rentals, I find most units I come across are about 70% under rented. We don't compete with Brantford cash flow though, especially some of the tougher areas in Brantford. I have had some clients from there and was told Brantford is profitable if you're screening techniques are good
Kitchener will see greater appreciation because of the LRT and google, but we are suppose to be seeing an LRT extesion shortly after.
Also if you're interested in London I could refer a friend of mine, hes an investor but just got his real estate license and is looking to stay investor focused
Investor · London, On · Member since 2016 · 27 posts · 26 votes
10y
I invest in London Ontario.
Finding 1%+ Turnkey is possible in London, Ontario...
The property will likely be a student rental. By Fanshawe college you can buy a 5-6 bedroom home for between 200-250K that will rent for 400-500 a bedroom. a 5 Bedroom on Thurman Circle for example will likely rent for $475 a bedroom and you can likely acquire one for 230-250K if you're patient and vigilant. Let's say you purchased for 250K so 2375/250000= 0.95% - pretty close to 1%. Or properties can be found just south of the college for 200-240K and some have legal 6 bedrooms. Likely rent range for a property in that area is 400-450 a bedroom. So 6 bedroom @ 400 = 2400/240000 = 1% (Note this is the landlord paying for utilities - so may not be an apples to apples comparison with US counterparts that are getting 1% in rents with tenants paying utilities). The obvious caveat being that student rentals can be very management intensive and a very hands on investment. (I have 3 student properties all by the college that are generating greater than 1% in monthly rents).
There are also multi-family units in some of the rougher areas of London (King Edward, Argyle etc) where you can potentially find rents in excess of 1%. 6plexes on King Edward can frequently be had in the 350-500K range and are often getting 600-800/unit in rents. (Note there's nothing on the market at this exact moment fitting this profile, but I'd say a couple buildings go up for sale every year based on my experience). This would be close to apples to apples - as the tenants would be paying their own utilities. There are also frequently fourplexes in Argyle for sale (MLS 574470, 574466) Assuming you could get them below asking (my opinion quite possible) you could get these properties in that 1% range as well. The caveat being, you're not getting grade A tenants in these locations, but you can get Ok-Good tenants if you're very thorough in your search.
My personal preference is finding properties in need of TLC that are adjacent to downtown. These older properties when you initially buy, are unlikely to meet 1% rule but if you update the units, buy a building with character and market to right demographic (young professionals) you can get in excess of 1%. I most recently did this with my fourplex in Woodfield. Purchase price 385K (at that time it was getting 3300/mo in rent - so 0.86%) however upon completion of renos (40K) I'm now getting 4,720 a month in rents and my total cost for the property is 425K so 1.11% and I am getting good tenants in that building. (young professionals etc). This type of property though obviously isn't turnkey from the outset, but does benefit from potential appreciation.
So in summary, in London Ontario you can get in excess of 1% rents, but finding 2% (In my experience) is unlikely, and the property will certainly not be turnkey from the outset. (There are some mixed use buildings that do approach 2%, but if you ever had a vacancy in the commercial unit - it may be hard to fill).
Playing devils advocate for London though - with student rentals and the multi's that are in less than desirable locations... It's not advisable that you hold your breath while waiting for significant appreciation. (unless you're forcing appreciation through strategic renovations etc)
I believe @ShawnAllen would be a great resource if you're interested in investing in Woodstock Ontario.
I've heard (second hand) that Sarnia and Windsor both can frequently get 2% with their student rentals. Anyone have experience in those markets they'd like to share?
Engineer · Surrey, BC · Member since 2015 · 50 posts · 22 votes
10y
Very helpful comments here and good memories. I grew up in Dorchester (parents are still there). My wife and I decided to move to Surrey 11 years ago from London. I've thought about investing in both Woodstock or London but when I've checked it's just a bit pricey for a long-distance investor. One of my favourite areas anywhere in Canada is Wortley Village and I gather that it's a good income property area. Comments about Fanshawe remind me of a university party near Fanshawe, where so many people jumped at once to test out the cheap construction the ceiling drywall fell down. I didn't cause the damage but I do remember getting out fast, and I now shudder at the cost of repairs!
My only concern about SW Ontario (and one of the reasons we moved 'out west' is that the auto industry seems to be on a slow one-way trip south. It will be interesting to see if medical or other industries fill the gap.
I bought my first investment property on Thurman shortly after the "Halloween Riot" in 2009. I bought another in 2011 on the same street. I also bought a house on Fleming right before the 2012 "riots".
I've had 3 student properties for 6,5, and 4 years respectively. (15 years of ownership total) Not once have I had an insurance claim - will that continue on in perpetuity - probably not - but at the same time if you manage your properties appropriately a great deal of the issues other land lords have can be minimized/mitigated.
The Fleming property was perhaps the only one where the students activity did sting a bit. We had waived all conditions and were just waiting to close when the 2012 one happened. (Happened a month before we closed, a week after we waived all conditions) we probably could have got the property for 5-10% lower than what we paid had we bought after instead of before. (If I hadn't been strapped for cash I would have tried to buy one right afterwards - as house prices were impacted for a short period of time on those streets). Regardless though the house still cash-flowed, had the same return as projected etc regardless of whether the disturbance happened or not. (Though it is a strong reminder of the importance of having proper insurance)
Honestly though - I'd look at these disturbances as a great buying opportunity when they do occur. It's just part of the being a student landlord experience. You can find similar "riots" have occurred at Queens University etc. In General I'd say every 5 years or so there's some sort of major disturbance in London related to students. Things just get a lot more publicized now between social media and mainstream media's desire to inflate these issues.
My previous post was removed, due to "contravening BP Rules", not sure how I did that. I'll try to repost. You DO have a strong stomach.
I had an apartment near Wharncliffe/Oxford with a huge yard that backed onto the Thames. Apparently during one homecoming, the kids threw a party complete with a band, etc and had over 200 there. My PM called me to say he had it under control and notified the police - they weren't long breaking it up as they are quite vigilant about breaking up these parties after the Fanshawe riots.
Anyway, interesting story about that riot in 1984. Having grown up in London, I vaguely recollect that riot/party (I was just a wee lad) as some of my parent's friend's kids were there and talked about it for years.
Real Estate Agent · Kitchener-Waterloo-Cambridge, Ontario · Member since 2013 · 408 posts · 90 votes
10y
I had VTB on fanshawe student rental I had to let fall apart due to insurance costs and difficulties. A large portion of that may be due to my age though as I'am not older then a lot of those students.
I partied there in high school pretty fun stuff and we wrecked a lot of houses, but in the same breath not every house was a write off. Some students locked their doors and kept away from the crazyness.
I would say if you're tenant screening process if good it's great for cash flow. I wouldn't recommend it for the lazy turn key style landlords, or one without a good PM referral.
@Peter Crisp Good observation in regards to the auto industry, in my opinion London, Oshawa shouldn't see a decline and neither should we in the KWC area as the cities have done a good job of slowly bringing in more diverse employment. London and Oshawa have large amounts of government based employment in hospitals and education systems and here in KWC we have diverse manufacturing and growing tech sector.
But I have been seeing a large influx of Windsor and surrounding area residents coming out our way or to Hamilton. I have a tenant right now renting in Cambridge selling his house in Chatham because he couldnt find work.
Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
10y
Being one of the lazy investors @Samuel Sedore mentioned, I got out of the landlord game in year 2 of my real estate career. I had a townhouse on Thaler Ave. in Kitchener where I inherited the existing tenants. Although they weren't bad and neither were the ones who replaced them, I quickly realized that financing these same people was the only way to go for me.
@Sarah Larbi Take a look at providing financing for credit challenged buyers. It's an almost stress-free way to invest. Providing a stable monthly income that requires very little management. The downside is that you give up appreciation. But I've always viewed appreciation as a "would be nice, but not guaranteed" kind of thing. If a property doesn't cash flow then really you're just gambling that it will go up.
Here in KWC I focus on the $300-$500k price range because they're pretty homes and easy to sell. I make roughly 40% of the purchase price of the property over the course of the deal, at least, theoretically. I say that because not many of my buyers are going to stay put for the 25 years to pay the house off. Most of them will either cash me out or I'll buy the house back.
Recently I've been putting more of a focus on offering them a simple buy-back plan so they don't have to go through the hassle of listing the house. Each time I buy a house back I make more money.