Cash Flowing Properties in Toronto

[Cehunt Duong]

Hello Bigger Pockets!

I am new to BP (this is my first post by the way!) and fairly new to Real Estate as well. I purchased my first income property in east end of Toronto in the summer of 2014. A semi-detached house built in 1900. We renovated and I currently live in one of the units with my fiance. It is currently fully tenanted and cash-flow's positive (me and my fiance charge ourselves below market rent for our unit).

I went in on another semi-detached, 2 unit house in the west end of Toronto which should be closing this July. It is a 3 bedroom house with basement apartment.

Given how quickly home prices are rising, I wanted to get some feedback on what other Investors in Toronto are doing? Are you still finding rental properties that cash flow? Are you looking to move to other cities to invest?

Cehunt

[Thomas S.]

You can only do estimates when doing the numbers on long term holds. IN my opinion Cash flow positive is not possible in TO due to the disproportionate relationship between purchase price and rental rates. Some investors believe the only way to have positive cash flow is to pay down the mortgage but in real terms that has no effect on cash flow once you pay the opportunity cost on your equity. Depending on the property type I estimate expenses between 40% and 50% and calculate debt repayment on 100% financing. That pays you a return on your equity. I also use higher interest rates than today as they will rise at some point. 

Once you use those calculations you will see that TO is not the place to invest for cash flow.