Author Topic: Rental/investment property in Canada - is there anywhere good?  (Read 1157 times)

Healthie

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Rental/investment property in Canada - is there anywhere good?
« on: September 16, 2021, 05:15:54 PM »
Hi pals,

I've been researching rental regions in Canada for the last few weeks, and been thinking about buying a rental for a few years. I will be getting 100k of equity out of my current home and I'm interested in buying anywhere in Canada and having it managed by a property manager. For simplicity, I want something turn-key to not have to pay a lot for updates and repairs.

Some factors I need to figure out, and need to talk to realtors/property managers, and maybe you guys can give me some insight:

1. What cities have potential for buying a rental in? So far I've looked at larger cities/towns in  BC, Saskatchewan, Nova Scotia, Manitoba and a little bit of Alberta- Saskachewan and Manitoba have potential; but Saskachewan has a lot of new 2-bedroom condo rentals on the market, and articles I've read indicate it has been difficult to find tenants for these units.

2. What can I reasonably expect services-wise and price-wise from a property manager? an acquantance has told me he pays 10% of rental costs, and the company has arranged for some renovations to his properties. He's said he only talks to them a few times a year and it's been smooth sailing. I've done some posting on reddit and received feedback that property managers are sneaky and screw over their customers. In addition I got the sense people thought what I'm trying to do is sleazy, rather than trying to find an extra revenue stream as an individual investor. I got the sense most of these replies were not by people with rentals. Please tell me what your experience with property managers are.


3. What is a realistic, cash-flow positive % of purchase-price to expect from rentals in Canada? So far; I have not found a place that's between 1%-2% of the purchase price anywhere; using the formula in the 'evaluating a rental property' thread on MMM --> the closest I found was a hour for $190k in Winnipeg that advertised it was renting for $1700. I understand I need to do the calculations to make sure my bases are covered, but from what I've seen of the market, finding 1-2% in Canada is nigh impossible.

4. I spent about 15 minutes reading about REIT's, which may be my fall-back if I can't find a profitable property. Do you own them and do you like them? This question is less important than the other 3; I can do some googling, too.

Thanks everyone.

Rockies

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Re: Rental/investment property in Canada - is there anywhere good?
« Reply #1 on: October 02, 2021, 10:43:31 PM »
I'm curious to hear from an experience landlord what actually would make sense to buy at todays prices to rent out. I was looking if I could buy my first rental in Canada but when I run the numbers on pretty much any location I just dont see how it could make sense. Of course I havn't educated myself yet enough to make a good call, but I am curious what a seasoned pro would do if they had to start today.

It just seems like price to rent ratios are horrible everywhere across the country, except in depressed places where it might be hard to find tenants.

highflyingstache

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Re: Rental/investment property in Canada - is there anywhere good?
« Reply #2 on: October 03, 2021, 06:03:23 PM »
I have a well diversified group of tennants, disciplined managers and reputable names behind a grouping of residential and commercial properties.

REITS, are the only way I'll be a landlord. Can't find a way to make the cashflow sense anywhere so far. That, and REITs have yet to call me at 2 am when the hot water heater is broken...

Healthie

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Re: Rental/investment property in Canada - is there anywhere good?
« Reply #3 on: November 08, 2021, 01:06:03 PM »
I know I left this a bit dead; I did a bit of research and frankly, it does not look like there is anywhere super skookum. Winnipeg has lots of houses for sub-100k to 200k and rent for 1500-1900; but the agent I got set up with said these are in the hood, older, and tend to have higher turnover and upkeep. The margins are fairly thin for how much risk there is. I ended up using the chart from the evaluating a rental property thread on here; and whereas he had something like 400% difference in the ratio between rent:mortgage in his favor, the houses I put in to evaluate started at 12X% and only started looking considerably more appealing about 15 years after owning.

Life and investing can be as complicated as we want it to be; I'm at a point I don't want to look for needles in a haystack. Frankly it doesn't look super promising for buying single family home rentals in 2021 in Canada. My plan is to keep my little starter home as a rental with a property manager and figure out my investments in indexes.

Freedomin5

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Re: Rental/investment property in Canada - is there anywhere good?
« Reply #4 on: November 09, 2021, 10:42:23 PM »
That's probably a good way to go. I haven't found anything (yet) in Ontario that meets the 1-2% rule of thumb. Our current place in Toronto is at 0.5%. We keep it because of the appreciation. Also, we bought the place 10 years ago at a price that we thought was exorbitant at the time, but in hindsight turns out to have been a steal.

One real estate area that I thought would have been a good bet was the university student population, so looking at the smaller college towns where real estate prices are cheaper, but rentals are steady because of the students. However, with the pandemic and the growth in online learning, I'm not sure that still holds true.

SunnyDays

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Re: Rental/investment property in Canada - is there anywhere good?
« Reply #5 on: November 10, 2021, 10:08:26 AM »
Definitely don't buy in "the hood" in Winnipeg.  You won't want to deal with the kind of renters you will get there.

I live about an an hour away from said city, and there are quite a few rentals here where SFHs are split into an upper level and a lower (basement).  Depending on the house, it might be possible to hit the 1% mark or even a little over.  There's such a house right across the street from me and the same people have owned it for many years, so they must be making a profit.  However, I'm also privy to verbal fights on the lawn about paying the rent and see a lot of turn-over, even in this pretty desirable neighbourhood.  And honestly, the other neighboours aren't keen on it being a rental because there always seems to be a group of young guys in at least one of the units with loud trucks and motorcycles.

If you want to do some hunting in this town, PM me for exact location.

Healthie

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Re: Rental/investment property in Canada - is there anywhere good?
« Reply #6 on: November 11, 2021, 12:07:41 PM »
Definitely don't buy in "the hood" in Winnipeg.  You won't want to deal with the kind of renters you will get there.

I live about an an hour away from said city, and there are quite a few rentals here where SFHs are split into an upper level and a lower (basement).  Depending on the house, it might be possible to hit the 1% mark or even a little over.  There's such a house right across the street from me and the same people have owned it for many years, so they must be making a profit.  However, I'm also privy to verbal fights on the lawn about paying the rent and see a lot of turn-over, even in this pretty desirable neighbourhood.  And honestly, the other neighboours aren't keen on it being a rental because there always seems to be a group of young guys in at least one of the units with loud trucks and motorcycles.

If you want to do some hunting in this town, PM me for exact location.

I've basically come to decide it might not be for me. I bought my house a few years ago and I'll be keeping it when I move; aside from this, I will probably abstain from rentals unless a really good, unpassable deal came up. I think if I was in a different life stage, I would seriously consider re-locating to Winnipeg, where managing rentals and buying property has more potential due to inventory, price, and rent rates; but as an absentee landlord, and not being able/willing to fly to WInnipeg to do updates/renos/etc., I don't have the resources to make it work.

SunnyDays

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Re: Rental/investment property in Canada - is there anywhere good?
« Reply #7 on: November 11, 2021, 08:32:55 PM »
Wise decision.  I’ve periodically gotten the “landlord bug” but at my age I just don’t have the energy for it.  I’m trying to simplify my life and I’m just not willing to complicate things for maybe a few hundred bucks a month.

LetsRetireYoung

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Re: Rental/investment property in Canada - is there anywhere good?
« Reply #8 on: November 15, 2021, 03:04:29 PM »
Wise decision.  I’ve periodically gotten the “landlord bug” but at my age I just don’t have the energy for it.  I’m trying to simplify my life and I’m just not willing to complicate things for maybe a few hundred bucks a month.

Extremely same. :) I turned my US condo into a rental when I moved to Canada (it was easier and faster than selling), and while it's been mostly smooth, that does come with a lot of moral dilemmas... Three years from now, they'll finish building a subway station right next door, and I'll be able to flip it for a very nice profit. I can't wait to get rid of that burden, just so I could take the proceeds, pay the taxes, and put the rest into some nice quiet index fund.

Less tax forms, less stress, a hell of a lot less responsibility... I know that some people love building their Monopoly-like real estate empires - more power to them, but that seems to require some rather specific personality type hahaha

Healthie

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Re: Rental/investment property in Canada - is there anywhere good?
« Reply #9 on: November 16, 2021, 08:03:07 PM »
LetsRetireYoung -

in my research lately; which my decision has been to max my TFSA, RRSP over this year (holding a few grand back to get the tax benefit), and putting the remainder in a cash account, the following did occur as a min/max option:

Buy rental properties, try and have them break even or rent at a slight loss (I'm conservative with my cost estimates; the ones I've looked at haven't been able to break even for at least several years, this is taking into account property management) for a few years, refinance, take the money out and invest in indexes or other rental properties.

It's definitely a strategy, but in thinking about it I realized it is not investing to my style.