Any one did some deals in GTA recently for buy hold and rent?

25 Replies

I keep looking for deals in GTA mainly using Realtor, and most of them have buy/rent ratio high enough to push me to negative cash-flow. the one that make the equation are only the ones that require too much repair. Have anyone had different experience  to share? 

@Sam Hanaa

Unless your adding some value, and by some I mean major. Adding units into homes or furnishing and doing short term your probably going to be negative.

Toronto is a primo market so it doesn't really work with the normal 20% down model. 25%-30% is the normal down payment if you want cashflow or cash neutral.

But as you know in the past the major gains were made in appreciation.

That is what I though too  @Shawn Kay   , however doing such modifications can cost another 25% of the home price , and will end up putting more cache into the unit. 

I think if you are in GTA , or even in Ontario in general , you need either to be construction contractor or partner with someone. I feel disconnected from the materials on this website as it hardly apply to our market here. 

@Sam Hanaa

It definitely will cost a lot to add a unit or two into an existing home but if you are able to convert single to multi legally it will give you huge increases in value instantly + you should have much better cashflow numbers.

Being intimately familiar with zoning requirements and construction is a must.

Beauty is that it's mostly front loaded work.

You learn the zoning code once and asides from updates, you don't need to learn it again.

You will be able to see a property and be like "ahhh, 30 frontage by 100 depth = x possible uses" or required a variance or whatever.

With condos you just gotta pay the premium to get some cashflow or at least cash neutral.

Not really too many options but if you know the layouts, legal requirements for bedroom size and features you should be able to find a unit with the possibility of adding another bedroom.

It's a bit harder since some walls in condos can't be torn down and if you want to do it by the book you need to go through the condo board which can be a whole other beast.

If you are newer, planning to only grab a couple units over time or looking for cashflow at 20% I would venture out a bit.

London, Hamilton, KW and so on will give you more bang for your buck + it's easy AF to manage remotely especially on a small scale.

Pipe explodes? Call a plumber. Toilets clogged? Call a handyman.

Or you can just hire a property management company. I prefer to just do things myself but a PM is a great option for many especially those with demanding day jobs and stuff.

I'm a realtor in Burlington and have a great detached 2-unit home coming to market in the next few weeks. Basement currently rented for $1500/month. Top 2 levels would get ~2400/month.  All recently updated. Approx $830k. With 20% down you would be cash flow positive. 

 Lots  of affordable multi-units with great #'s and appreciation. 

The deals are out there. They just aren't as easy to find!

Originally posted by @Christina Wasley :

I'm a realtor in Burlington and have a great detached 2-unit home coming to market in the next few weeks. Basement currently rented for $1500/month. Top 2 levels would get ~2400/month.  All recently updated. Approx $830k. With 20% down you would be cash flow positive. 

 Lots  of affordable multi-units with great #'s and appreciation. 

The deals are out there. They just aren't as easy to find!

 I checked the kijiji, it sound like full house can go for 2400/month in Burlington, without basement will go for less . 

check my analysis here , even with 3900 monthly income  it only do $35/month cache-flow. with any mistake and you are in negative . 

only doing that to prove how hard is to get healthy cache flow in Ontario with current house prices .

@Sam Hanaa Hope you're well - I'm still regularly buying & finding value in Hamilton. I'm still buying on MLS although trying to find Private deals simultaneously.

Would be happy to share numbers - Shoot me a DM

I agree with @Shawn Kay .  I bought a detached bungalow in Oshawa at end of 2016.  My plan was for short term investment but the market changed and I switched to plan B.  I hired a local PM who took care of everything for me hassle free.  Sure they take a good chunk of the rent but it was never my goal to profit from renting and at minimum I have someone else paying for my mortgage.

I am finding properties in Brampton that cash flow similar to the out of GTA town's recommended by many on here.

You get the benefits of being in the GTA and having the property close to home as well as the cash flow factor.

Hi Jay 

Can you share how can you positive cachflow in Brampton ? 

Basement + upper level =3500 

Home prices : 650 + for home that is good enough to be rentable .

Did I miss something? 

Jacob : why not , will pm you my number to have some chat. 

Hugo: would you mind sharing your  home price , cacheflow nimbers ? The reason why I ask to all benefits from experience of each other as most numbers on this website is for USA houses

@Hugo Lo

Hey Hugo, try giving self managing a shot.

It's really not hard at all. Just keep a few handymen from Kijiji on file, a plumber and an electrician.

You will rarely get a call and when you do they are generally things that can be solved with a quick phone call.

Saves a lot of $$ plus you will start to learn the ins and outs of managing properties, picking tenants and so on.

If you don't want to pick a tenant yourself for any reason you can just hire a realtor but I would suggest learning how to do it yourself.

Naborly is a credit check and rental application app I use. 100% free of charge also.

@Shawn Kay  for now I will stay with the PM.  My full time job and  2 young toddlers are enough to keep me pulling on my hair.  My original plan was not to hold for long term, it Just happen to end up this way.  When I bought this house, I was hoping to hold short term and let it appreciate and maybe renovate for a profit.  Renting out was like my back up, back up plan, so I never looked into what or how to be a landlord.  Up till now my passion is still with flipping and  I don’t think I am cut out to be a landlord.

@Sam Hanaa  I got the house for $350k.  It was in good shape, I put in roughly $1500 for some minor repair before it was rented out.  I don’t have positive cashflow from the rental.   The rent covers roughly  80% of all the expense  (mortgage, property tax, home insurance and PM).  

I heard it takes +5 yrs to achieve positive cashflow from a rental property.  Maybe it’s easier with a condo in the heart of Toronto.

This is why I’m here at BP, hope I learn some tricks and start making money.

@Sam Hanaa

Clearly the numbers being posted on this thread will never produce positive cash flow long term. The only way they will ever see any positive returns is by buying it with equity. Their dead equity will generate cash flow that the properties never will. Funny thing is their cash would earn a better return in a income fund. Rent to value ratios are way off in most large centers in Ontario. You are correct that investing in TO for cash flow is a fantasy. You need to head out of town to smaller communities. I don't know the west side  but there are plenty of small towns east of TO along the 401 that will meet the 1% guide if you look.

That's a great calculator! Rental prices vary based on where in Burlington you are looking. This property is south Burlington which tends to demand higher rents. 

Where are you located? If you managed the property yourself you'd have a very healthy cash flow. I have some great local contacts and always happy to lend a had locally. A great handyman on-call is worth his weight in gold and could save you in the long run if you only need him a few times a year. 

And of course that was just one example and that price is the listing price, so may end up slightly lower leaving you with better monthly #'s.  Will see if I can find any other good examples for you in the area. 

Cheers!

Originally posted by @Sam Hanaa :
Originally posted by @Christina Wasley:

I'm a realtor in Burlington and have a great detached 2-unit home coming to market in the next few weeks. Basement currently rented for $1500/month. Top 2 levels would get ~2400/month.  All recently updated. Approx $830k. With 20% down you would be cash flow positive. 

 Lots  of affordable multi-units with great #'s and appreciation. 

The deals are out there. They just aren't as easy to find!

 I checked the kijiji, it sound like full house can go for 2400/month in Burlington, without basement will go for less . 

check my analysis here , even with 3900 monthly income  it only do $35/month cache-flow. with any mistake and you are in negative . 

only doing that to prove how hard is to get healthy cache flow in Ontario with current house prices .

@Hugo Lo :  thanks for the numbers, that is correct 350K is hard to cache flow with one rent. As for getting positive cache-flow with time that is correct at least in theory, because rent get to increase with inflation rate , while the mortgage stay the same (assuming increase in interest is neglect-able ).  

@Thomas S.   you mean Kingston , etc ?   I am more familiar  with the west side (Hamilton , Windsor , London) , I never been in the east side cities , but it worth doing a visit this summer. 

@Christina Wasley : Yes , I use it in all my calculations  ...  Burlington is out of my budget, it seem even more expensive that Brampton , maybe because the houses are newer. I am actually handy man and can do more minor to average fixes in house. but if the house is far from me to drive I ll need a property management to take care of that . 

Originally posted by @Sam Hanaa :

Hi Jay 

Can you share how can you positive cachflow in Brampton ? 

Basement + upper level =3500 

Home prices : 650 + for home that is good enough to be rentable .

Did I miss something? 

Jacob : why not , will pm you my number to have some chat. 

Hugo: would you mind sharing your  home price , cacheflow nimbers ? The reason why I ask to all benefits from experience of each other as most numbers on this website is for USA houses

 Those numbers are pretty accurate, you get decent cash flow with them and get the upside of being in the GTA.

For comparisons sake they come out about equal to a 5-6% cap rate multi-family in terms of cash flow. If somebody listed a multi-family in the GTA at a 6% cap there would be lineups around the block to buy it.

Originally posted by @Jay Gill :
Originally posted by @Sam Hanaa:

Hi Jay 

Can you share how can you positive cachflow in Brampton ? 

Basement + upper level =3500 

Home prices : 650 + for home that is good enough to be rentable .

Did I miss something? 

Jacob : why not , will pm you my number to have some chat. 

Hugo: would you mind sharing your  home price , cacheflow nimbers ? The reason why I ask to all benefits from experience of each other as most numbers on this website is for USA houses

 Those numbers are pretty accurate, you get decent cash flow with them and get the upside of being in the GTA.

For comparisons sake they come out about equal to a 5-6% cap rate multi-family in terms of cash flow. If somebody listed a multi-family in the GTA at a 6% cap there would be lineups around the block to buy it.

 Hi Jay 

I did some simple calculation here , and sound like first year will be in negative cache flow , I think the deal will be good if the house can be obtained for 500K ,

@Shawn Kay

Hi Shawn, I am interested in knowing what other features or functions are there on the app - Naborly that you mentioned. 

Is it available on the iOS devices? I tried to download it but could not find it in my app store. Do you also use a virtual assistant or have any recommendation for it? Thank you!

There is no way in he** any property worth 650K with rent at a measly $3500 will ever produce true positive cash flow. Most investors in TO are dependant entirely on appreciation and have no concept of expenses going forward. If someone tells you that you can achieve positive cash flow with the present expenses they are blowing smoke up your skirt.  Expense estimates have nothing to do with yesterday they are all about tomorrow.

Any property you can not achieve a 1% (or very close to) ratio rent to value on is not worth investing in unless you are a speculator. Big city investors live with negative cash flow unless they are hunting for C/D class investment properties.

Don't let realtors mislead you.

@Christina Wasley is right. Lots of deals @Sam Hanaa. Just need to actively look. Grow your network too. Get out to meetups, chamber meetings etc and talk to lots of people. You'd be surprised at how many people actually have an interest in real estate or know someone who knows someone.

I'm changing tenants on a 3 bdrm, 2bth Semi in an up and coming area in Hamilton right now. I would entertain a chat about selling it Sam. We've got twins on the way, and I have recently purchased a big upsize home for our family. I have a great positive cashflow on the house, just put a new roof on it, but the lump of equity may be better suited being directed at my family right now. 

If you want to chat, drop me a line anytime.

I have a townhouse that's being rented out in Toronto for almost 3 years now and it has negative cashflow each month.  I've been wondering if it's worth banking on the capital appreciation since it did increase by about 35-40% over 3 years.  I'm still undecided on whether I should just sell it.  But to your question...no its very rare to find cashflow properties in the GTA.  The 1% rule practically doesn't exist in the GTA unless you're willing to overspend on renos and rehab.

@Jonathan Ho

Make the math and see howmuch will be the profits after you sell it subtracting all the losses you have in the years of holding and see if it worth keeping the property.

In general , most properties trun to positive cacheflow due to inflation , but with this High home prices it might takes years before you turn to positive CF

@Sam Hanaa , I know this is a older thread but there is hardly anything on GTA besides this. Have you had any luck or did you move to smaller cities. I am in a similar boat and havent been able to do a deal for a couple of years now. Going out of GTA implies hiring a PM and my past experience hasnt been very pleasant.

Originally posted by @Jonathan Ho :

I have a townhouse that's being rented out in Toronto for almost 3 years now and it has negative cashflow each month.  I've been wondering if it's worth banking on the capital appreciation since it did increase by about 35-40% over 3 years.  I'm still undecided on whether I should just sell it.  But to your question...no its very rare to find cashflow properties in the GTA.  The 1% rule practically doesn't exist in the GTA unless you're willing to overspend on renos and rehab.

Agreed. Its almost impossible to find a single tenant rental that cash flows with 20% down. You need multiple tenants in a non conforming duplex triplex to have a glimmer of hope and this includes what you mentioned "over spend on renos and rehab".