Where to buy?

[Nick Ovington]

Hi folks. I've been listening to podcast over the last year and reading to prepare myself for crossing over the line to real estate investing. In Ontario, I find it hard to find properties that will cash flow at the 1%rule at the least when taking into account all the appropriate expenses. Advice would be good, as I understand the value of what this game is all about.

Thanks,

Nick

[Luc Boiron]

@Nick Ovington

As @Ming Lim said, to cash flow in Toronto you need to do more than just buy a house and rent it.

However, if you're able to do the same thing outside of Toronto, you can get even better cash flow.

For example, I bought a bungalow in Orillia a few years ago with some partners. We paid $220,000, and rented out the whole house for $1,650, which was high for Orillia. A year later, we converted the property to a duplex (we needed a minor variance from the Committee of Adjustment, got refused, and I successfully appealed to the OMB).

The reno to convert to a duplex legally was $50,000. All in, the purchase + reno was $270,000. We rented the upstairs for $1,450 and the basement (both 3 bedroom units) for $1,270. Total rent of $2,720, passing 1%. We put in separate hydro meters, so with tenants paying their own hydro we cash flowed quite well.

So, good cash flow is very possible in Ontario, though Orillia doesn't have the appreciation that Ming gets in Toronto.