Living In Toronto But Investing Outside? Help Needed

[Brandon White]

Hello, my name is Brandon and I am a 18 year old guy living in Toronto looking to gain as much information as I can about real estate investing.

I seem to be stuck right now on what I should do, I am convinced that Toronto is not a very cash-flow friendly place for new investors. So I have been researching for properties outside of the GTA. Places such as Hamilton, St. Catharines, London, Windsor etc. Since I will most likely be living and working in Toronto after I finish college, I am having a tough time figuring out how I will be able to invest in these places where I do not know the market and where I do not live close by to. 

I have heard of property management and turn-key companies but I would need recommendations from any investors. If anyone has advice on how I should go about investing that would be very much appreciated.

Thanks

[Matt Andrews]

Hi Brandon, way to go for thinking of investing this early on in your life. The earlier you get started the better!

You're right, the further away you go from the GTA, the better returns you'll get. My key metric that I look for when determining any income property is CapRate, which essentially is how much money does the property earn (before factoring in the mortgage), compared to the price of the property. CapRate = Annual Net Operating Income / Purchase Price, where Net Operating Income is your income minus your expenses. 

I look for to see that a property has a CapRate of at least 8%, and preferably closer to 10% before spending any time considering a property. I purchased both my triplexes in Windsor for an 11% CapRate. In Toronto you'll be lucky to find a 5 Cap with prices being so inflated, and many other cities offer between 6-8. That's why I turned to Windsor; the economy is recovering and the city is getting better each day, however the average price is still well below Ontario's average, leading to a bigger ROI than most cities out there.

I am close with a Realtor that works with out of town investors and property managers. Feel free to reach out if you want her contact info and she can help you out further.