1% rule area in Canada (income properties)

39 Replies

Hello fellow Canadians, 

I had been investing in US mainly due to their good web infrastructures on finding deals and managing them through property managers.  However, with the financing structure of being a Canadian and tax filing requirements, I am looking for a Canadian location that has potential and cash flow.  I live in Vancouver, so the Greater Vancouver Area is totally out of the equation.  I am not as familiar with other parts of Canada, so I am excited to learn more!  

Hopefully this info will be useful for other Canadians as well as it's not easy to navigate through all the financing and tax complications.

Thanks, 

VZ

@Kash Jawed   Thanks for the suggestion.  Do you know what's the core industry there, and if there are any up coming plan for Hamilton and St. Catherine?  

I am looking at Ottawa and Edmonton.  Research from the web suggests that their average home price is now.  I am sure a government town paid decent?  Not sure...  Anyone from Edmonton and Ottawa can comment on their income property potential?  

I work in Edmonton downtown. It’s turning around but is still quite weak. I was planning to do corporate rentals but after investigating with company we use for corporate rentals, the vacancy is around 70% which is pretty weak. I prefer Ontario. 

@Kash Jawed. I'm interested in how you did the financing for the BRRRR in the Canadian system. Did you use your own funds or private money up front and then one mortgage at the end? How long did you have to own it before refinancing and what LTV were you able to get?

thanks.

@Victor Zhou. I'm also located in Vancouver. Meet up sometime? I'm doing a lot of market research for the West Coast so I like you am looking.

Originally posted by @Nathan Chase :

@Kash Jawed. I'm interested in how you did the financing for the BRRRR in the Canadian system. Did you use your own funds or private money up front and then one mortgage at the end? How long did you have to own it before refinancing and what LTV were you able to get?

thanks.

@Victor Zhou. I'm also located in Vancouver. Meet up sometime? I'm doing a lot of market research for the West Coast so I like you am looking.

if you guys do, count me in! live on the northshore, working on closing my first place in edmonton. 

Calgary is softening up on some of the housing prices but won't be comparable to the success you have enjoyed in the states.  I find that buyers have to be more creative on what they are  wanting out of a property and to think about alignment with areas that will turn over and bring land prices up. Good luck!

@Nathan Chase   @Luc H.   For sure!  I work in downtown, maybe we should grab a coffee or lunch sometime and share our research?  Luc, how's your Edmonton place coming along?  What's your rough cap rate for the property that you are closing in Edmonton?

I am interested in Edmonton and the island as they are still the capital, so the medium income will support rental income / growth.  I am a bit more interested in Edmonton as it's more isolated from the Vancouver market.  It will be a better hedge compared to the island as the island's price is somewhat correlated to Vancouver.  I have a place in Vancouver, so I don't want my net worth to cut in half by one single event, being the crash of the Vancouver housing market.  

@Kash Jawed What about residential rental?  Is the vacancy that high as well?  For cap rate, will it be able to achieve like 0.7 or 0.8% as a rough ball park in Edmonton?  My impression is that housing price took a bit hit after oil price crushed a few years back.  Is it still in a down market (buyers' market)?  

Originally posted by @Nathan Chase :

@Kash Jawed. I'm interested in how you did the financing for the BRRRR in the Canadian system. Did you use your own funds or private money up front and then one mortgage at the end? How long did you have to own it before refinancing and what LTV were you able to get?

It's no different than BRRR detailed on the BP forums. I do 20% down, renovate it (3 months), refinance with the same bank with 80% LTV. Here's what I focus on:
- buy properties where I can add value (reno, add second suites, etc.)
- ensure the ARV makes sense for that area
- have a damn good mortgage agent (someone who's an investor themselves - there's quite a few out there)

@Kash Jawed What about residential rental?  Is the vacancy that high as well?  For cap rate, will it be able to achieve like 0.7 or 0.8% as a rough ball park in Edmonton?  My impression is that housing price took a bit hit after oil price crushed a few years back.  Is it still in a down market (buyers' market)?  

 From what I'm hearing, it's around the same. I did some further research. Although I'm not ready to pull the trigger in Edmonton,  I like the buildings around Jasper and my second choice is Whyte (82nd) - Old Strathcona area. I drove around today and narrowed down some low rises. 

@Kash Jawed   For low rises, do you mean that you are looking at multi-family?  you have mentioned that it's around the same.  Is that the cap rate of around 0.7-0.8%?  I think 07-0.8% is normally good enough for cash flow purposes.  

Originally posted by @Victor Zhou :

@Kash Jawed  For low rises, do you mean that you are looking at multi-family?  you have mentioned that it's around the same.  Is that the cap rate of around 0.7-0.8%?  I think 07-0.8% is normally good enough for cash flow purposes.  

 I'm referring to apartments, i look beyond cap rates. Also, I haven't run financials yet but it would likely be higher than this

Originally posted by @Victor Zhou :

@Nathan Chase   @Luc Holland  For sure!  I work in downtown, maybe we should grab a coffee or lunch sometime and share our research?  Luc, how's your Edmonton place coming along?  What's your rough cap rate for the property that you are closing in Edmonton?

I am interested in Edmonton and the island as they are still the capital, so the medium income will support rental income / growth.  I am a bit more interested in Edmonton as it's more isolated from the Vancouver market.  It will be a better hedge compared to the island as the island's price is somewhat correlated to Vancouver.  I have a place in Vancouver, so I don't want my net worth to cut in half by one single event, being the crash of the Vancouver housing market.  

@Kash Jawed What about residential rental?  Is the vacancy that high as well?  For cap rate, will it be able to achieve like 0.7 or 0.8% as a rough ball park in Edmonton?  My impression is that housing price took a bit hit after oil price crushed a few years back.  Is it still in a down market (buyers' market)?  

Have to re-run the numbers so dont know off the top of my head. I had to put down 35% due to bank requirements for the interest rate i got but i am OK with it. Due to this it cash flows ~450$ a month so will add this to the account for the next unit which i am targeting for within the 18 months after closing. Ill send you my personal information in a PM - free this weekend for a coffee. Edmonton has a bunch of interesting characteristics i would be happy to chat about.

Originally posted by @Kash Jawed :

@Kash Jawed What about residential rental?  Is the vacancy that high as well?  For cap rate, will it be able to achieve like 0.7 or 0.8% as a rough ball park in Edmonton?  My impression is that housing price took a bit hit after oil price crushed a few years back.  Is it still in a down market (buyers' market)?  

 From what I'm hearing, it's around the same. I did some further research. Although I'm not ready to pull the trigger in Edmonton,  I like the buildings around Jasper and my second choice is Whyte (82nd) - Old Strathcona area. I drove around today and narrowed down some low rises. 

havnt checked out those areas: im in the south west, Chappelle. Love this area for a bunch of reasons, happy to elaborate if interested! (though not BRRR set-ups which i think is your strategy, places are far too new).

Hi All,

If you're having a meetup, count me in! I live in the north shore in Vancouver as well and like Edmonton as my go to. Its nice to see a topic relating to Canada versus having to translate everything from the US. 

Originally posted by @George Lay :

Hi All,

If you're having a meetup, count me in! I live in the north shore in Vancouver as well and like Edmonton as my go to. Its nice to see a topic relating to Canada versus having to translate everything from the US. 

Hey George, i'm North Shore as well. Meeting Victor (next week it sounds like - just finding the best day) and will advise. 

Sent George and Nathan both a PM, so we can connect through an email chain for a time and location!  Will be excited to share some of our thoughts and strategy to build some more long time wealth and income!  

Hey guys,

If you guys are doing a meet up, I would be interested too. I live in Vancouver but have been investing in Ontario the last year or so. Hopefully we can all share some ideas and learn something new. 

Hey all, 

Just wanted to chip in from Quebec, over here the market definetly seems cheaper than Vancouver or the prairies. 

I've been looking into some mfr lately close to Montreal and there seems to be some decent cash flow. Montreal itself I feel it is much harder to find something that will cashflow, as duplexes start at around 500k or so in the nicer areas! 

Good to see some Canadians around here, investing in the US does seem complicated from a tax standpoint. 

Originally posted by @Victor Zhou :

@Kash Jawed   Thanks for the suggestion.  Do you know what's the core industry there, and if there are any up coming plan for Hamilton and St. Catherine?  

I am looking at Ottawa and Edmonton.  Research from the web suggests that their average home price is now.  I am sure a government town paid decent?  Not sure...  Anyone from Edmonton and Ottawa can comment on their income property potential?  

 I'm from Ottawa. Inside the city on SFRs and small multis I struggle to find a 1% property - but within an hour and a half of the city the potential is there. Real estate values in Ottawa are very stable (due to government town, as you mentioned). Vacancy rate is also crazy low right now. My realtor just told me of a 4 bdrm townhome that is worth ~375K and renting for $1900 with three applicants on day one, and one of them offered a $3000 signing bonus. But that's renting at 0.5%, not 1%.

Hi all!

Please also let me know when a meeting will be happening. I would love to meet like minded people in real estate investing. I have properties in Calgary, Kelowna and Vancouver all apartments. I would like to dive more into multifamily complexes.