Real Estate

Ottawa Real Estate market discussion

  • Last Updated:
  • Dec 4th, 2020 7:14 am
Banned
User avatar
May 12, 2004
9759 posts
4113 upvotes
Ottawa
BlueSolstice wrote: I'm seeing a huge number of new construction townhomes, most of which to be finished in the next few months, posted for rent in Kijiji. Are the freehold towns mostly bought for rental investment?
The cap rate on those is horrible. You’re basically betting on the property value to increase while they chew money out of you, problem with those towns is they can churn those out pretty quickly. So unless the plan is for those owners to buy and hold until the community matures (8-10yrs) they’ll be in for a surprise...
Censorship is telling a man he can't have a steak just because a baby can't chew it.
- Mark Twain
Deal Addict
Dec 4, 2016
1858 posts
884 upvotes
Cas77 wrote: The cap rate on those is horrible. You’re basically betting on the property value to increase while they chew money out of you, problem with those towns is they can churn those out pretty quickly. So unless the plan is for those owners to buy and hold until the community matures (8-10yrs) they’ll be in for a surprise...

The cap rate on freehold towns are better than singles and semis, without the stigma of a condo fee. If people suddenly wants to invest in RE and play landlord, that's probably where they will start. A co-worker of mine bought a freehold town a few years ago, before prices went up. It was a 10 year old unit in a somewhat mature neighbourhood. He financed 100% using a HELOC on his primary residence, and was cashflow negative $200 a month while managing it himself. Would that be considered bad investment? Compared to freeholds in Toronto and Vancouver, the cashflow doesn't seem too bad.
Banned
User avatar
May 12, 2004
9759 posts
4113 upvotes
Ottawa
BlueSolstice wrote: The cap rate on freehold towns are better than singles and semis, without the stigma of a condo fee. If people suddenly wants to invest in RE and play landlord, that's probably where they will start. A co-worker of mine bought a freehold town a few years ago, before prices went up. It was a 10 year old unit in a somewhat mature neighbourhood. He financed 100% using a HELOC on his primary residence, and was cashflow negative $200 a month while managing it himself. Would that be considered bad investment? Compared to freeholds in Toronto and Vancouver, the cashflow doesn't seem too bad.
When you start managing your own properties it's no longer an investment it's an expensive hobby.

I've owned 2 freehold towns in the past in Ottawa and it's not a good investment (one was all fun and games until a $8000 roof on a 15yr old town and a new furnace did me in). I've owned a single (joint venture) we added a legal basement suite and resold within a year to someone looking for a hobby and likely made more money than my buyer will make in 5 years.

Ottawa in general is not a good place to invest in rentals unless you get into the triplex/fourplex and up.
Censorship is telling a man he can't have a steak just because a baby can't chew it.
- Mark Twain
Deal Addict
Dec 4, 2016
1858 posts
884 upvotes
Cas77 wrote: When you start managing your own properties it's no longer an investment it's an expensive hobby.

I've owned 2 freehold towns in the past in Ottawa and it's not a good investment (one was all fun and games until a $8000 roof on a 15yr old town and a new furnace did me in). I've owned a single (joint venture) we added a legal basement suite and resold within a year to someone looking for a hobby and likely made more money than my buyer will make in 5 years.

Ottawa in general is not a good place to invest in rentals unless you get into the triplex/fourplex and up.
Thank you for sharing your personal experience. The economic downturn of the past 7 years due to federal government layoff certainly didn't help rental yields, as market rent was flat and not keeping up even with rent control. My impression was that my co-worker bought himself a job that probably pay less than minimum wage effectively, as he did all the cleaning, and replacing dishwasher, and showing the place to prospective tenants. I think he still has the property. It probably is still cashflow negative, but shows a profit in tax returns.

Hopefully market rent start going up in a reasonable rate in Ottawa soon, given the more reasonable rental vacancy rate last year. The abundance of new supplies does limit the upside of RE investments outside the greenbelt.
Banned
User avatar
May 12, 2004
9759 posts
4113 upvotes
Ottawa
BlueSolstice wrote: Hopefully market rent start going up in a reasonable rate in Ottawa soon, given the more reasonable rental vacancy rate last year. The abundance of new supplies does limit the upside of RE investments outside the greenbelt.
Not going to happen. Many of the investors I've talked to (and also a friend owns a property management company) they are offloading as quickly as they can or looking at condo conversions.

http://torontosun.com/2017/10/03/wynnes ... dbe521a4d1

This article refers to the GTA market but also applies to Ottawa from what I've heard. So thanks to Wynne over-ruling the 2000 year old law of supply and demand rents will be low and vacancy even lower. The only ones that will make money are those buying run down shit boxes not putting in a dime and renting at the decent housing rates.
Censorship is telling a man he can't have a steak just because a baby can't chew it.
- Mark Twain
Deal Addict
Dec 23, 2010
1845 posts
903 upvotes
Moon
Cas77 wrote: Not going to happen. Many of the investors I've talked to (and also a friend owns a property management company) they are offloading as quickly as they can or looking at condo conversions.

http://torontosun.com/2017/10/03/wynnes ... dbe521a4d1

This article refers to the GTA market but also applies to Ottawa from what I've heard. So thanks to Wynne over-ruling the 2000 year old law of supply and demand rents will be low and vacancy even lower. The only ones that will make money are those buying run down shit boxes not putting in a dime and renting at the decent housing rates.
Except that literally shows rents WILL go higher... Less supply = more demand = higher prices. Wynne has not yet implemented complete price control yet. Rent control in Toronto has caused average asking price of rents to rocket 47%

http://www.cbc.ca/news/canada/toronto/t ... -1.4529133
Newbie
Jan 18, 2017
27 posts
4 upvotes
Your friend's investment is not bad as he didn't put any money down. Consider only $200 monthly pay, and tenants pay everything, monthly mortgage payout is more than $200. I'll consider it has positive cash flow, not ideal, but still manageable.
Newbie
Mar 15, 2017
23 posts
5 upvotes
Gatineau, QC
I'm looking for an Ottawa real estate lawyer for the buyer side of a real estate purchase.
I'd also like the lawyer to prepare the offer as the prospective property is FSBO.

Kanata or Nepean area would be preferred for convenience.

Thanks in advance.
Deal Addict
Dec 4, 2016
1858 posts
884 upvotes
zhh081205 wrote: Your friend's investment is not bad as he didn't put any money down. Consider only $200 monthly pay, and tenants pay everything, monthly mortgage payout is more than $200. I'll consider it has positive cash flow, not ideal, but still manageable.
Well, it's a freehold town, so that $200 negative cashflow did not include big-ticket repair and replacements that come up from time to time. Like Cas77's example of roofs and new furnaces. Or the dishwasher he put in. The dishwasher was a cheap one, and he put it in himself. He also did all the cleaning in between tenants himself. It's a lot of work, and definitely not scalable, even if he could show a profit on his tax form.
Deal Addict
Dec 4, 2016
1858 posts
884 upvotes
Cas77 wrote: Not going to happen. Many of the investors I've talked to (and also a friend owns a property management company) they are offloading as quickly as they can or looking at condo conversions.

http://torontosun.com/2017/10/03/wynnes ... dbe521a4d1

This article refers to the GTA market but also applies to Ottawa from what I've heard. So thanks to Wynne over-ruling the 2000 year old law of supply and demand rents will be low and vacancy even lower. The only ones that will make money are those buying run down shit boxes not putting in a dime and renting at the decent housing rates.
I came from Vancouver, so the disappearance of institutional landlords is not new to me. The availability of professionally managed apartment buildings came as somewhat of a surprise when I moved to central Canada. Rent control was inflation +2%, and rental apartments still don't get built.
Deal Fanatic
User avatar
Feb 2, 2014
8329 posts
2335 upvotes
Toronto
Googtorruser wrote: I'm looking for an Ottawa real estate lawyer for the buyer side of a real estate purchase.
I'd also like the lawyer to prepare the offer as the prospective property is FSBO.

Kanata or Nepean area would be preferred for convenience.

Thanks in advance.
PM'd you an investor client of mine uses.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Banned
User avatar
May 12, 2004
9759 posts
4113 upvotes
Ottawa
I'm often asked who the better tract builders in the city are...I just got this email from Tarion which should answer that question:

We are proud to announce the finalists of the 2018 Homeowners' Choice Awards. The Homeowners' Choice Awards recognize a builder's excellence in customer service each year. These are the only awards that give Ontario's new home buyers the power to have their new home builder recognized for customer service excellence.

The following new home builders are finalists for this year's awards:

Small Volume Category
(5-20 possessions per year)
C. Kelos Homes, Thunder Bay
Gordon Tobey Developments, Brighton
Kolody Homes, Belle River
Lockwood Brothers Construction, Oxford Station
Stinson Builders Ltd., Belleville
Terry Waito Homes Inc., Petawawa

Medium Volume Category
(21-100 possessions per year)
Heisler Homes, Kitchener
Klemencic Homes, Trenton
OPUS Homes, Vaughan
Sal-Dan Developments Ltd., Sault Ste. Marie
Talos Custom Homes Ltd., Richmond
Triple T Holdings Limited, Peterborough

Large Volume Category
(More than 100 possessions per year)
Arista Homes Ltd., Vaughan
Devonleigh Homes Inc., Orangeville
Hayhoe Homes, St. Thomas
Mountainview Homes, Thorold
Sorbara Group of Companies, Vaughan
Tartan Homes Corporation, Ottawa
Censorship is telling a man he can't have a steak just because a baby can't chew it.
- Mark Twain
Deal Addict
Oct 3, 2004
3996 posts
710 upvotes
Cas77 wrote: I'm often asked who the better tract builders in the city are...I just got this email from Tarion which should answer that question:

We are proud to announce the finalists of the 2018 Homeowners' Choice Awards. The Homeowners' Choice Awards recognize a builder's excellence in customer service each year. These are the only awards that give Ontario's new home buyers the power to have their new home builder recognized for customer service excellence.

The following new home builders are finalists for this year's awards:

Small Volume Category
(5-20 possessions per year)
C. Kelos Homes, Thunder Bay
Gordon Tobey Developments, Brighton
Kolody Homes, Belle River
Lockwood Brothers Construction, Oxford Station
Stinson Builders Ltd., Belleville
Terry Waito Homes Inc., Petawawa

Medium Volume Category
(21-100 possessions per year)
Heisler Homes, Kitchener
Klemencic Homes, Trenton
OPUS Homes, Vaughan
Sal-Dan Developments Ltd., Sault Ste. Marie
Talos Custom Homes Ltd., Richmond
Triple T Holdings Limited, Peterborough

Large Volume Category
(More than 100 possessions per year)
Arista Homes Ltd., Vaughan
Devonleigh Homes Inc., Orangeville
Hayhoe Homes, St. Thomas
Mountainview Homes, Thorold
Sorbara Group of Companies, Vaughan
Tartan Homes Corporation, Ottawa
Is this based on the customer service survey that home owners fill out?
Banned
User avatar
May 12, 2004
9759 posts
4113 upvotes
Ottawa
swales wrote: Is this based on the customer service survey that home owners fill out?
Yes.
Every fall, Tarion engages a third-party research firm to conduct a province-wide customer satisfaction survey of new home owners in their first year of ownership – specifically, homeowners who took possession between October 1, 2016 and September 30, 2017.

More than 56,929 invitations to complete the survey were sent by email and post. More than 11,558 completed surveys were returned, representing a response rate of 20 per cent.

Survey questions focused on homeowners’ satisfaction with their builder, covering every stage in the homeowner-builder relationship – from the signing of the Agreement of Purchase and Sale, through construction and the pre-delivery period, to after-sales service.
So what's interesting is that out of those 20% they probably received responses from 90% of very dissatisfied new homeowners looking to vent. So for someone to be pleased with their builder and take the time to answer it must have been a great experience.
Censorship is telling a man he can't have a steak just because a baby can't chew it.
- Mark Twain
Deal Addict
Dec 4, 2016
1858 posts
884 upvotes
So Tartan is the only Ottawa builder on the lists. And they don't build towns in Kanata. I guess investors simply demand a price point they can't achieve.

Top

Thread Information

There are currently 5 users viewing this thread. (4 members and 1 guest)

arbytor, William W, canabiz, kwanyeung20