Real Estate

Which Canadian city would you invest in? Looking for opinions

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  • Jul 19th, 2018 1:32 pm
Newbie
Sep 23, 2017
97 posts
52 upvotes

Which Canadian city would you invest in? Looking for opinions

Hello.

Which city in Canada besides GTA and GVA would you invest in real estate?

I'm thinking to buy a condo apartment or maybe 2 units and rent them out. So far have 250k in savings. It looks like a lot of condos can be bought in 150k ~ - 300k range in places like Quebec City and Montreal.

There is a few things that are on my mind at the moment.

1. What is the appreciation of condo apartments in Montreal or Quebec City.
2. Would it make sense to split the savings, take out a mortgage and buy 2 units instead of 1? (i guess depends on appreciation and roi numbers)
3. How fast can these units be rented out? I understand that rental market in those cites might not be as hot as in GTA.
4. How to manage these rentals, I don't speak french and can't travel there that often to sort out repairs, showings, etc,?

Thanks....
36 replies
Sr. Member
Jul 4, 2018
526 posts
468 upvotes
If i have 100k, i will invest in Toronto DT.
But if I have 200k, i will invest downtown Toronto.
However if its like having 300k like you, i will invesr in Toronto Downtown.
Its not the question of high price or low profits.
It is about confidence, easy exit strategy, demand where people want to be, jobs, infrastructure, airport, cosmopolitan, NYC of Canada, Mumbai of Canada, Tokyo of Canada, London of Canada.
Deal Addict
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Dec 13, 2016
4527 posts
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Montreal is becoming too expensive for what it is (cheap rent).

I'm looking into calgary. No airbnb restrictions, so you can hire many managers around to take everything for you for a 20% fee.

Condos are also a lot nicer.
Deal Addict
Nov 13, 2013
4520 posts
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Ottawa
fabricatordog wrote: Hello.

Which city in Canada besides GTA and GVA would you invest in real estate?

I'm thinking to buy a condo apartment or maybe 2 units and rent them out. So far have 250k in savings. It looks like a lot of condos can be bought in 150k ~ - 300k range in places like Quebec City and Montreal.

There is a few things that are on my mind at the moment.

1. What is the appreciation of condo apartments in Montreal or Quebec City.
2. Would it make sense to split the savings, take out a mortgage and buy 2 units instead of 1? (i guess depends on appreciation and roi numbers)
3. How fast can these units be rented out? I understand that rental market in those cites might not be as hot as in GTA.
4. How to manage these rentals, I don't speak french and can't travel there that often to sort out repairs, showings, etc,?

Thanks....
1. Who knows. Past performance does not indicate future results. Over the past 40 years Montreal property has appreciated very slowly. Population growth is limited, corporate jobs are lacking, language keeps out the big emerging market investors. Will it now be discovered? Who knows.

2. Depends on your view of 1. and 3.

3. Rental market is weak in Montreal. Not enough good jobs relative to supply.

4. Property manager will be essential given all this. This increases costs not only their fee but they tend to agree with a tenant and call for a repair that you might push back on.

Why not invest closer to home? Assuming you are in GTA you could follow the herd to London or Collingwood maybe Kingston?
Deal Addict
Nov 22, 2017
1048 posts
804 upvotes
Agree with the poster above I would stay away from Quebec due to the language barrier. I would probably say Ottawa has potential and the surrounding Toronto area markets - Hamilton to the west and Clarington out east.
Deal Addict
Nov 27, 2013
1768 posts
2593 upvotes
For 300k in quebec city or montreal suburbs you can invest in a house which is a safer investment than condos.
Deal Addict
Mar 20, 2017
1370 posts
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First, it makes no sense to be RE investor without leverage, especially when debt is almost free.
Second, Quebec province is a bad investment. It is OK for speculation right now because of heating by foreign capital, but fundamentally there is no value because of insane rent control rules combined with abundance of rental inventory.
Deal Expert
Feb 22, 2011
16504 posts
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Toronto
I would be careful if I were you, cheaper places are cheaper for a reason. GTA & GVA are expensive because they are hubs of the country and will continue to see large influxes of jobs, investment and people. There are plenty of amazing places that don't see much appreciation because they have an equilibrium. Personally I don't think I would invest in property outside of those two in Canada. Maybe Ottawa but with mostly government workers and less industry there is really a limit to how much growth they can see.
Deal Fanatic
Nov 24, 2013
6479 posts
3344 upvotes
Kingston, ON
rjg4235 wrote: I would be careful if I were you, cheaper places are cheaper for a reason. GTA & GVA are expensive because they are hubs of the country and will continue to see large influxes of jobs, investment and people. There are plenty of amazing places that don't see much appreciation because they have an equilibrium. Personally I don't think I would invest in property outside of those two in Canada. Maybe Ottawa but with mostly government workers and less industry there is really a limit to how much growth they can see.
Even though they're both "buying condos to rent out," you're actually talking about two different types of investment. If you bought condos in expensive markets like GTA or Vancouver to rent out on a cash-flow negative basis, you're speculating on capital gains for the condos... the rental bit is just reducing your carrying costs. Investing elsewhere in cash-flow positive rental property with a lower price appreciation forecast has its own set of merits depending on what your investment goal actually is.

If I wanted to be a landlord, I'd be more interested in buying cash-flow positive property that eventually will pay off the leverage, even if appreciation over time only equaled inflation, than buying something that requires continual investment, in the hopes of high appreciation at some point in the future. Maybe I'm conservative that way. Anyway, I think one can more readily find those cheaper, cash-flow positive properties in the many smaller cities across Canada that also have healthy economies despite not being metropolises.
The national unemployment rate was 5.8 per cent in March. Statistics Canada also released seasonally adjusted, three-month moving average unemployment rates for major cities. It cautions, however, that the figures may fluctuate widely because they are based on small statistical samples. Here are the jobless rates last month by city (revised numbers from the previous month in brackets):

— St. John’s, N.L. 8.6 per cent (8.5)
— Halifax 6.0 (6.4)
— Moncton, N.B. 5.7 (5.3)
— Saint John, N.B. 6.9 (6.6)
— Saguenay, Que. 5.6 (5.8)
— Quebec 3.6 (3.2)
— Sherbrooke, Que. 5.7 (5.8)
— Trois-Rivieres, Que. 5.4 (5.0)
— Montreal 6.1 (6.0)
— Gatineau, Que. 4.7 (4.5)
— Ottawa 4.9 (5.3)
— Kingston, Ont. 5.4 (5.4)
— Peterborough, Ont. 4.8 (4.9)
— Oshawa, Ont. 4.5 (4.8)
— Toronto 5.8 (5.8)
— Hamilton, Ont. 5.3 (5.3)
— St. Catharines-Niagara, Ont. 5.6 (5.2)
— Kitchener-Cambridge-Waterloo, Ont. 5.1 (5.3)
— Brantford, Ont. 6.7 (5.1)
— Guelph, Ont. 4.9 (5.3)
— London, Ont. 6.3 (6.7)
— Windsor, Ont. 5.2 (4.9)
— Barrie, Ont. 8.8 (6.9)
— Sudbury, Ont. 6.8 (6.7)
— Thunder Bay, Ont. 5.1 (5.8)
— Winnipeg 6.3 (6.0)
— Regina 5.0 (4.9)
— Saskatoon 6.5 (6.9)
— Calgary 8.2 (7.9)
— Edmonton 6.7 (6.9)
— Kelowna, B.C. 5.2 (5.8)
— Abbotsford, B.C. 4.0 (4.1)
— Vancouver 4.0 (3.9)
— Victoria 4.5 (4.4)
https://business.financialpost.com/pmn/ ... adian-city
Deal Expert
Feb 22, 2011
16504 posts
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Toronto
Mike15 wrote: Even though they're both "buying condos to rent out," you're actually talking about two different types of investment. If you bought condos in expensive markets like GTA or Vancouver to rent out on a cash-flow negative basis, you're speculating on capital gains for the condos... the rental bit is just reducing your carrying costs. Investing elsewhere in cash-flow positive rental property with a lower price appreciation forecast has its own set of merits depending on what your investment goal actually is.

If I wanted to be a landlord, I'd be more interested in buying cash-flow positive property that eventually will pay off the leverage, even if appreciation over time only equaled inflation, than buying something that requires continual investment, in the hopes of high appreciation at some point in the future. Maybe I'm conservative that way. Anyway, I think one can more readily find those cheaper, cash-flow positive properties in the many smaller cities across Canada that also have healthy economies despite not being metropolises.


https://business.financialpost.com/pmn/ ... adian-city
I have posted about 20 times regarding cash flow positive or neutral condos in GTA. There are a lot. Condos have been edging up but rent has sky rocketed. I also don't see any reason to expect rents to be relieved especially with Tory as mayor and Ford as Premier. This is not going to end well for renters.
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Dec 13, 2016
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BlueSolstice wrote: I say montreal. Political landscape in Canada is completely different now compared to the 90s. I can see Montreal developing economically and catching up with Toronto/ Vancouver.
Not a chance.

The city is run by mafia

So much corruption at every level.

The businesses are going bankrupt in Montreal because the city has barricaded the streets. This kind of thug behavior by the government would never fly in a city like Toronto.

As long as I remember (since 1992) there is alwaya a road work at least 6 months a year creating nuisance.

The healthcare is one of the worst in Canada and getting worse.
Deal Addict
Mar 20, 2017
1370 posts
1165 upvotes
Mike15 wrote: If I wanted to be a landlord, I'd be more interested in buying cash-flow positive property that eventually will pay off the leverage, even if appreciation over time only equaled inflation, than buying something that requires continual investment, in the hopes of high appreciation at some point in the future. Maybe I'm conservative that way. Anyway, I think one can more readily find those cheaper, cash-flow positive properties in the many smaller cities across Canada that also have healthy economies despite not being metropolises.
I agree these are two different styles of investing-cashflow-based vs appreciation based. Where one is strong, another one is always weak.
In fact, cashflow-based strategy is dominated in USA.
However, the damage that Wynne made for investing climate in Ontario is so huge that is guaranteed to have double digit rental increases at least in next 2 years, since even Ford promised not to touch rent control.
In this environment, we are not really talking about negative cashflow as a permanent state. Only 1-2 years of negative cashflow for condos, up to 5 years for houses. If owner renews mortgage after 5 years to 30 years of amortization, there is literally no way to stay in negative cashflow zone.

Meanwhile, cashflow-based strategy is more dangerous than it looks in Canadian reality of inflated prices and unpredictable government.
In GTA, the areas with best cashflow positive rates dropped the most last year, while cashflow negative areas in Toronto downtown core even appreciated further.
Therefore, unique high-demand location can weather any insane government, while investors in suburbs would panic and sell massively.

In markets like Montreal, you are guaranteed to have both low appreciation and low cashflow, since even changing tenants does not give you an option to raise rent above guideline. Your expenses will be guaranteed to grow faster than rent increase and cashflow will be more negative each single year.
Quebec policies are quite literally saying: We've built enough, investors, we don't want your help with housing here at all.
Deal Addict
Dec 4, 2016
2011 posts
1030 upvotes
rjg4235 wrote: I would be careful if I were you, cheaper places are cheaper for a reason. GTA & GVA are expensive because they are hubs of the country and will continue to see large influxes of jobs, investment and people. There are plenty of amazing places that don't see much appreciation because they have an equilibrium. Personally I don't think I would invest in property outside of those two in Canada. Maybe Ottawa but with mostly government workers and less industry there is really a limit to how much growth they can see.
Ottawa can have huge job growth and RE would only go up a bit. Way too much land in the suburbs and no real geographic constrain for development. A tech scene is developing, but builders can easily put up 50k freehold towns within commuting distance if the city suddenly gets a ton of well paying jobs.
Deal Expert
Feb 22, 2011
16504 posts
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Toronto
BlueSolstice wrote: Ottawa can have huge job growth and RE would only go up a bit. Way too much land in the suburbs and no real geographic constrain for development. A tech scene is developing, but builders can easily put up 50k freehold towns within commuting distance if the city suddenly gets a ton of well paying jobs.
That's true. I also think people severely under estimate how much being on a lake will restrict growth. Especially by Union, can't really build anymore.
Deal Guru
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Feb 2, 2014
11231 posts
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Toronto
fabricatordog wrote: Hello.

Which city in Canada besides GTA and GVA would you invest in real estate?

I'm thinking to buy a condo apartment or maybe 2 units and rent them out. So far have 250k in savings. It looks like a lot of condos can be bought in 150k ~ - 300k range in places like Quebec City and Montreal.

There is a few things that are on my mind at the moment.

1. What is the appreciation of condo apartments in Montreal or Quebec City.
2. Would it make sense to split the savings, take out a mortgage and buy 2 units instead of 1? (i guess depends on appreciation and roi numbers)
3. How fast can these units be rented out? I understand that rental market in those cites might not be as hot as in GTA.
4. How to manage these rentals, I don't speak french and can't travel there that often to sort out repairs, showings, etc,?

Thanks....
If you're interested in yields and cash flow, take a look up North (ie Timmins).
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Deal Addict
Apr 21, 2014
2321 posts
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Alberta
Depends on what your goal is. If you are looking at total return (price appreciation + income from rent) then unfortunately Toronto and Vancouver are the only two cities that have a real estate growth trajectory. If you are looking at just cash flow positivity from rental (and basically don’t have any intention of selling) then markets like Calgary and Edmonton come to mind. Real estate prices are depressed there but heir average income is higher than Toronto. So there is money there and because they can be viewed as transient cities you will be able to find a renter and be cash flow positive. Just don’t bank on any significant appreciation. But I’m the mean time at least you will be cash flow positive.
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Nov 14, 2003
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LaLaLand
I wouldn't invest in any Canadian cities. It's too late unless you have a boat load of money.

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