Which location is best to start out in?

Question

Hi Everyone,

Mid next year, I have the opportunity to move to either Calgary or Toronto. Once I have moved, I am going to start wholesaling, rehabbing and slowly building my passive income property portfolio. My decision is going to be primarily based on where I can be most successful within property investing generally. I understand that wholesaling in Canada is generally unknown and is a lot less common than the US (due to stricter lending laws etc etc), but in all of your opinions, would it be easier to start in Calgary or Toronto?

I understand that Calgary is at risk of having its housing bubble burst (which could go in my favor) due to falling oil prices and rising unemployment (may also be good to pick up some distressed property owners!), however Toronto obviously has a much larger population (finding that diamond in the rough could be easier possibly).

What would you do if you were in my position?

Many thanks for all of your advice in advance.

Johnsy DSouza · Answer

Very true  Roy N

As a starter I would think -- a combination of flipping with rentals would be good, till one can establish oneself as a wholesaler. --My two cents --ofcourse

William Johnson · Answer

@Christian Chaffe

I would highly recommend the golden horseshoe area, specificlly the Niagara Region, for me it is perfect for the Canadian wholesalers.  It is depending on where you move but you will be anywhere between 5 and 45 minutes from United states (Niagara Falls and Buffalo) where you could also set up your business and operate if you're comfortable going back and forth over the border on a regular basis.  I love the area, I was born and raised there and it's beautiful and has amazing wine, picturesque orchards and hiking and beaches and waterfronts and the most friendly people you can imagine.  It is exactly where I would go if I didn't have my life established here in Montréal.  As a matter of fact contact me if you ever decide to take my advice and move there.

@Roy N. has some excellent advice.  There is a huge learning curve when it comes to wholesaling so if you do commit to doing it you should approach it as a five-year learning curve (like any trade or profession) you will need to find a mentor who knows how to flip houses, evaluate renovation costs, evaluate after renovation value, evaluate as is value, find financing, negotiate with agents and resellers etc.  I would only recommend wholesaling if you need to generate some starting cash to get into other more stable real estate investment area strategies such as multifamily, commercial, note investing etc... Wholesaling and flipping give you the most liquid asset ($$$) but nothing else whereas the other strategies mentionned give you long term investment vehicles that will hold value and appreciate at the same speed or faster than inflation and will give you a cash flow while doing so.

To find a mentor you need to take a look at some of the great posts on this site that address that challenge however it would be the best investment of your time upon arrival in whichever market you should decide to move to.

Roy N. · Answer

@Christian Chaffe

Welcome to BP!

I'm a long term skeptic about the viability of wholesaling as a full time income stream in Canada due to the relative size of our market(s); low mortgage arrears and delinquency rates; differences in the practices of Power of Sale and foreclosure; and privacy laws.

My skepticism aside, folks are wholesaling properties in the larger metropolitan areas. @William  Johnson is operating in MTL; there are a few in the GTA; and a handful in the lower mainland of BC.   There are/were even a couple of {hopeful} wholesalers on BP from HFX, but I have not heard from them in a while.

As for the plan to start flipping or buy-and-hold, some of the best valued markets in the country are right here in the Maritimes (Moncton was recently rated as the most affordable city in the country by Demographia).  The tradeoff is that, HFX aside, appreciation will be less here than in the GTA, Vancouver, or other parts of the country.

However, if your choice is Calgary or TO, I would expect Calgary's recent economic slowdown to be creating more opportunity to find homeowners in trouble, but you would need to weigh this against the overbuilt levels of new inventory and the fact the buying population has also declined ... Calgary may need to slide further into its cycle before the timing is right to flip, or pick-up right-priced rental properties.

TO is just expensive overall and is harbouring a pent-up glut of condominiums which, if unleashed, could make for a bumpy ride. There are still deals to be found in the GTA and the smaller communities around its perimeter, but you will need to dive into the corners to get the puck.  @Gary McGowan and @Doug Pretorius have a better sense of the GTA pulse.