Hamilton or St.Catharines for cash flow on a rental? Thoughts?

Question

Hey all,

I am curious to hear your thoughts on Hamilton vs St Catharines, or both; cash flow, quality of tenants, overall increased value of the property over the next 5 years.

Where do you see the market heading in these two cities and do you favour one over the other?

Jacob Perez · Answer

Hey @Melissa Scott

Both are good markets, & are very similar to be honest. I don't think one is overwhelmingly better then the other it would really come down to where you come across the better deals.

Long term I prefer Hamilton for sure but it's also more expensive so depending on the kind of purchase you could be better off in St. Catherine if you budget gets you into a larger multi unit in one city vs the other.

Mehdi Motevalibashi · Answer

@Melissa Scott I'm curious to know too.

I think the increase in property values would be higher in Hamilton. It gets the first ripple effect from Toronto's growth. Also, people who work in Toronto and can't afford a house there, might consider Hamilton but not St Catharines.

But it's been extremely difficult to find a deal in Hamilton in the last 2 years that I've been looking.

But that could be a reason for St Catharines properties to cash flow better. I have not yet done a deal in st Catharines though.

Melissa Vass Scott · Answer

@Mehdi Motevalibashi You bring up all the issues I have been discussing with clients as well.  To get anything in Hamilton for under 500k now is next to impossible.  We are definitely feeling the effects of the mass exodus of Toronto since Covid.  What I wonder is with all this working from home does that make St. Catharines a real possibility for increased value over the next few years.  They have already seen a jump in property values but will it jump significantly again.

I haven't done a deal in St. Catharines yet either, I like the cost of property there though, lower crime rates as well.  Right now I see more potential in Hamilton for bigger growth, with all the building that is happening plus the waterfront development, that changes things signficantly.

Rory DeSilva · Answer

Does anyone have any recommendations for areas within Hamilton and St Catharines that have been experiencing a lot of interest? Based on what I've been hearing, this low inventory market and movement out of the GTA are two key reasons why prices are getting so high. Not sure how long they can stay there.

Adam Krawec · Answer

@Evan Kummer

They are starting to pop up a lot more frequently lately.

Have you just not found one you like?

Evan Kummer · Answer

I work in the construction industry and my clients are building all around Niagara. I'm currently looking into duplexes in St. Catherines under $500k for my next purchase, something I can't find in Hamilton.

Jadon Kaiser · Answer

Yeah unfortunately that appears to be the case, and being so new to all of this it's a bit discouraging to say the least. I hope that at least inventory will start to meet demand and that we'll see at least some more reasonable properties go up.

I saw that one on Buttrey, something about it seemed odd and I've spent a lot of time going to properties that seem ok in the pictures but ultimately have some major issues (foundation) that make it way too much for what it is. Even with low interest rates, I'm not sure how someone could get decent cashflow when somewhere like that only rents for $700-$900/month. I suppose flipping is where the money is at that point, or some other strategy but honestly for being so far from toronto it still has all the GTA issues it seems.

I have no experience with commercial buildings but if you can get cashflow I suppose it doesn't matter where from. Only issue is that I have no idea how smaller retail units will return after all this, if they even can.

Adam Krawec · Answer

@Jadon Kaiser I couldn't imagine a drop in Niagara, there are far too many investors ready to jump on homes. Even when a home should sell for under market due to the property condition, some of the misguided are still overpaying.

There was an interesting listing to hit the market today on Buttrey, it's better than Division street location, but also one of the lower end areas of Niagara Falls. It is going to need some work, but at $349k for a duplex, it's below market, and fairly close to the Niagara Parkway.

I was talking to my mortgage broker last night, where we may start seeing deals are in the mom and pop shop commercial buildings in the coming months ;)

Jadon Kaiser · Answer

I've also been continuously looking in this area and did take a look at that one on Division. Being my first property, the lack of experience and questionable rent numbers (I don't think the monthly rents per unit were realistically sustainable, but again I'm newer) combined with the terrible area and subsequent lower appreciation made me pass on it. It's a crazy market for something like that to be considered by so many, as nice of a turnkey it would have been otherwise.

I'm personally in no rush, but with the uncertainty I have no clue where the housing market will go but based off what I've seen I can't imagine a massive drop.

Hamilton or St.Catharines for cash flow on a rental? Thoughts?

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