what would you consider a good deal Toronto area

Question

considering homes have been overpriced here for so long and are coming down now. average home price is supposed to be $300k down from $350k in Toronto. I would have to say the prices vary widely depending on location. quality homes cost more. how low do you think the prices should go to be a good deal in Toronto and the surrounding cities? I am asking about investing not home ownership.

Hai Loc · Answer

@Ajay Kahlon

I currently don't invest in Toronto(GTA) I did a few assignments on pre construction condos in Liberty Village back in the days.

Couple of reasons why I don't invest locally in "Toronto"

#1 Prices are too high

#2 Toronto land transfer tax will eat your profit on a flip

#3 Cap rates are too low hence return on investment or cash on cash will stay single digits on a hold factoring in vacancy rates and property management

#4 not too many private deals

#5 multiple offers on desirable areas (its like that everywhere)

#6 little to no seller financing

#7 minimal creative financing

#8 Little to no cash flow relying on equity and appreciation to be positive

I was looking in Charlotte, Atlanta and many places in Texas but the prices sky rocket.

Chicago and Columbus still have deals.

Only project I will spend my time on in Toronto would be what I did for my friend a few years ago. Buy a 2 or 3 story detached in East York that walking distance to Danforth and convert it into 3 rental units. Must have separate entrance for the basement and 2 car parking at the back. If it would be converted from a single family I would make it relatively easy to convert back when the time comes to sell.

It was on Danforth and Woodbine and he was cash flowing living in the main level unit. But that was 3 years ago and prices changed. You can probably still find something out there making a 5% return if you find your own tenants and manage yourself.

Roy N. · Answer

Paul,

I would be looking almost anywhere other than Toronto (or Vancouver) at the moment.  Unless you need to be downtown TO, the prices are more than a little north of ridiculous.

As for your question on taxation, the following link will get you started on the Canada - U.S.A. tax treaty.

Joel Owens · Answer

Shana some markets are not rental markets at all.In those cases you invest in other markets where you can leverage your returns from your higher income in a more healthy market.

Example if you had 300k cash and you could buy 12 properties at 25,000 each that rented for 700 a piece for 8,400 a month could you get the same return in Canada buying a 300k house??

The answer is a big no you couldn't rent a 300k house for 8,400 a month in income minus expenses of course.As the rents increased some over the years along with appreciation you could get very nice returns.

If you had 300k to invest you could also buy a distressed asset such as an apartment complex with deferred maintenance and occupancy issues for cash and turn it around or use hard money  and once the property is stabilized refinance in a year or sell off for a profit.

What you can do depends on how much money you have to play with without bringing in another partner or raising capital.

Hope it helps.

Quentin D. · Answer

Hi Shana,

It is not the price of the house that should concern you but what type of income you can draw from it.  If you are buying solely for appreciation then you are speculating and not investing.

There are opportunities in all types of markets.  It really is based on what you know what to do with a property - Buy and Hold, Lease to Own, or Fix and Flip are just a couple main ways.

Take Care,

Quentin

Account Closed · Answer

@Hai Loc great input! thanks.

Also, when you tag someone in the your post, make sure you click on the person names that pops up at the bottom when you start typing i.e: '@Aja....'. This way the person gets a notification when his/her name gets mentioned in a post!

Account Closed · Answer

@Hai Loc

you make some valid points. Toronto appreciation in the past years have been insane. Where do you invest in the US and how to you balance with investing here and being a Canadian and living in Toronto?

Roy N. · Answer

I just re-read my post above ... I should quit trying to type on my phone ... the auto-correction feature turns my numerous typos into humorous reading

Hai Loc · Answer

@ Roy N.

Agreed.. There is no way I will buy an investment property in Toronto today and expect it to appreciate the way it has been. Only property I own in Toronto is my primary residence. All my investments are in the US. Cash Flow is king and you are not getting much of that here.

Roy N. · Answer

@Hai Loc

It is easy to look in the rearview mirror.  However, appreciation is not guaranteed and the longer and frothier the market, the less guaranteed it is.   If you are buying a rental property, at a minimum it needs to be cash-flow positive.  Realistically, your money needs to make as food, preferably better, return than you can achieve with a more liquid, {relatively} safe investment.

That has not been easy to approach in the TO market for some time ... but if you must be invested in TO and look hard enough, you can usually find something.

Hai Loc · Answer

Wow... You buy anything in Toronto in 2009 and hold it to now you are likely to have a minimum of 50% appreciation if not 75%.

what would you consider a good deal Toronto area

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