Real Estate

Best location for investment property

  • Last Updated:
  • Feb 20th, 2019 5:33 pm
[OP]
Member
Apr 24, 2018
372 posts
22 upvotes

Best location for investment property

Within Ontario, where is the best location to purchase investment property based on the following factors:

- monthly return on investment
- ease of finding renters
- future value of property
23 replies
Member
Jun 10, 2008
304 posts
172 upvotes
Brampton
I don't think you will get a healthy monthy return AND future value of property. You have to choose one. I like Chatham for cash flowing. No shortage of good potential tenants as well. Windsor is a good market but too far for me.
Jr. Member
Aug 16, 2011
148 posts
72 upvotes
OTTAWA
airpods wrote:
Feb 15th, 2019 8:54 am
Within Ontario, where is the best location to purchase investment property based on the following factors:

- monthly return on investment
- ease of finding renters
- future value of property
Ottawa downtown... on #1 and #2... one bedroom rents there are $1800 now, with avg price for those only 300k; can always find people who work for the gov't on contracts there... they've lagged the rest of Ontario in terms of capital appreciation though... i think only 25% since 2009 whereas GTA have gone up like 70%
Newbie
Nov 5, 2018
43 posts
33 upvotes
Yonge and Eg, Mount Pleasant and Eg, King West, Queen West
Member
Nov 10, 2017
340 posts
183 upvotes
Yes, King West (Fashion and Entertainment district)
Newbie
Jul 2, 2018
74 posts
45 upvotes
GTA
Getting all of those together is tough, you will need to pick your strategy. If I could find major cash flow and future appreciation together without forcing the appreciation through value-add opportunities I would be buying something everyday.
Find an area and become an expert on it. I'd say multi family buildings are the closest thing to big cash flow + appreciation.

Talk to realtors or investors who deal specifically with what you are wanting to do and see if they are willing to just talk to you.
Attend networking events and learn from the bests and also find people in a similar position to you to bounce ideas off and to motivate each other to push forward.
Real Estate Sales Representative
Deal Addict
Mar 27, 2004
2936 posts
424 upvotes
Toronto
incredibly difficult to find good yield and appreciation in Toronto. most condos are yielding maybe 3 to 4%. some newer ones even less.

i sold a fourplex and the yield was only 2.3% but location is great.
Cash rebate Realtor

Homelife Bayview

President Award 2018
[OP]
Member
Apr 24, 2018
372 posts
22 upvotes
Thanks guys.

I guess in order to find something that yields good monthly returns, the purchase price has to be relatively low. But then, that usually means that future growth in property value isn’t that great.

What do you guys look for in an investment property? Do you focus more on monthly return or future property value?
Deal Addict
Jan 9, 2010
1086 posts
408 upvotes
airpods wrote:
Feb 17th, 2019 11:56 am
Thanks guys.

I guess in order to find something that yields good monthly returns, the purchase price has to be relatively low. But then, that usually means that future growth in property value isn’t that great.

What do you guys look for in an investment property? Do you focus more on monthly return or future property value?
I always look at capital appreciation since I plan to hold long term. Rents will eventually catch up and in the meantime even though you may be slightly cash flow negative, your tenant is basically subsidizing your mortgage. I think of it as an interest free or negative interest loan (if the amount of your cash outflow is actually less than your principal paydown) and eventually rents will catch up where I will be immensely cash flow positive. Obviously there is a limit to that if you're very very severely cash flow negative.

On the contrary if you're solely looking at cash flow that's very short term imo since you can never change the fact that the product itself has lower potential for appreciation. Another way to look at it is if you could buy two properties for the same price, but the difference between the two are two things:

1) One has a higher potential for capital appreciation
2) The one that has a higher potential for capital appreciation carries a higher interest rate on the mortgage for the first 5 years

Which one would you choose? I think it also changes if you're thinking about inter-generational wealth (ie. passing it down to your kids) since they will really be the one to reap in the fruits of your labour/investment decisions.

Just my two cents and philosophy.
Newbie
User avatar
Oct 9, 2018
36 posts
5 upvotes
For investment properties, you also want to find a location where the tenants are not "going to stay here until I die" type of tenants (so think 2-4 year range tenants). My friend owns a few rental properties and has one that's been tenated since 2010. He's been creatively trying to incentivise the tenant to leave as he could get double the rent in the current rent market but the tenant is happily staying put.
Deal Addict
Jul 21, 2008
1011 posts
795 upvotes
GTA
airpods wrote:
Feb 15th, 2019 8:54 am
Within Ontario, where is the best location to purchase investment property based on the following factors:

- monthly return on investment
- ease of finding renters
- future value of property
Toronto. Hold on for 30 years and you will come out like a bandit. Rent prices are dumb too. Just don’t expect to cashflown unless you put a significant portion down at the time of purchase.
Member
Jan 12, 2017
390 posts
139 upvotes
I like the idea, but that project is never going to fly now that they've revealed they want DC's & property tax money.
Bunch of yahoo's with no idea how things actually work. This attempt to 'uber-ize' government/public services is not going to end well. Still too many boomers in the public sector for that to fly.
JosephB012 wrote:
Feb 15th, 2019 9:43 am
Toronto East Bayfront. Future is bright.

https://www.thestar.com/news/gta/2019/0 ... ision.html
Member
Jan 12, 2017
390 posts
139 upvotes
Depending on how much work you're willing to do, a good investment that might hit all your requirements would be 70+ year old homes along the subway line (not Vaughan). Look in areas with good schools. What you'll have to do is break the house into a triplex (main floor, second floor, basement). If you're lucky and find a property with a laneway, you'd get a fourth rentable unit in the form of a second floor laneway house.

In a good school neighborhood, you could probably find some decent renters - $2500 x 2 (main floor, top floor) + $1500 x 2 (basement, laneway) = $8k/mnth. Possibly more given the limited vacancy in areas with good school and walkable to the subway.

I've seen some houses needing a gut at around $1-$1.2m around the danforth and bloor west village/roncy/dufferin. You'll need to gut to do the conversion anyways, so no loss there. You'll be in maybe $1.5m after all the work and should be cash flow positive from the start.
airpods wrote:
Feb 17th, 2019 11:56 am
Thanks guys.

I guess in order to find something that yields good monthly returns, the purchase price has to be relatively low. But then, that usually means that future growth in property value isn’t that great.

What do you guys look for in an investment property? Do you focus more on monthly return or future property value?
Jr. Member
Aug 27, 2018
107 posts
108 upvotes
airpods wrote:
Feb 15th, 2019 8:54 am
Within Ontario, where is the best location to purchase investment property based on the following factors:

- monthly return on investment
- ease of finding renters
- future value of property
This is such a silly question.

Anyone who thinks they know a genuine bargain isn't going to share it with you.
Anyone who thinks they know a whole locality that hits all three items is mistaken.
Anyone who tells you a locality is most likely talking their own book.

Yet another idle landlord, looking for an easy gig.

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